Car Insurance Prices: Predictions for 2008

The Future of Australian Car Insurance Prices

Nov 21, 2007

Market analysts suggest that car insurance prices in general should fall during 2008 due to increased industry competition -- both from new entrants and from existing players that are increasing their presence in the market. The use of the Internet by consumers has also led to price decreases, as the costs associated with selling online versus in-branch or over the phone, is much lower for car insurance companies who are now passing these savings onto the end user.

There are several new players in the Australian car insurance industry. Many of these companies only have a web based presence, and thus can offer cheaper prices than traditional providers who have physical branches around Australia.  While both the traditional insurance companies and the net-based companies deal with claims processing, net based companies operate at a lower cost by using technology to reduce the number of branches and other overhead to pass on the savings to the consumers in the form of lower premiums.

Another new player to enter the car insurance market is the Commonwealth Bank which already has a presence and a customer base in other areas of the insurance market. CBA is hoping to capitalise on customer loyalty and successfully enter the car insurance market. Rumour has it that they will also announce several special offers and discount rates to attract new customers to their brand. The entry of this well known and respected insurance provider, can only increase competition and lead to more competitive car insurance policies.

Another area in which consumers are expected to save in 2008 is in the age- specific areas of car insurance. As we all know, young people (18-25 males in particular) pay significantly more for car insurance than any other demographic. It is believed that insurance companies are going to start targeting this segment of the market and offering discounts to in order to obtain a larger share.  This has already occurred in other segments with older drivers, and women in particular, being offered favourable rates.

Consumer’s use of the Internet to obtain quotes and compare different insurance providers and products, has also increased their awareness of some smaller and less well known companies and also of companies that have not traditionally sold to their area. This has also led to the increased competition being that the big companies are now facing. And we all know that as their slice of the pie becomes smaller, they will do anything they can (including lowering their prices) to retain market share.

So according to the above analysis, all Australians should be able to look forward to cheaper car insurance premiums and better products, as the effects of the growth of competition in the market continues to be felt in 2008 and beyond.

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