Where do car premiums go?
We understand that changes to your premium can be confusing. As a guide we have broken down where insurance premiums go, because it’s important to us that you know where your money is going.
Naturally, you'd expect one of the largest parts of the premium collected are used to help payout claims. Claims are an important part of what we do to help protect what matters to you.
A part of the premium collected goes towards paying our insurance premium to reinsurance providers. We purchase additional cover of reinsurance to protect against the exposure to large scale events such as storms, floods and cyclones. This helps us maintain our ability to payout claims.
A part of the premium goes towards government taxes and charges. After we have calculated the amount to cover your insurance policy, any applicable stamp duty, GST, charge and levy is then applied.
Every business has operating costs that enable them to continue their operations and service their customers. That's why a percentage of the insurance premium goes towards the operating cost of running our business. We also invest in the technologies and products that would improve the services we provide to you.
Like any business, we need to make a profit to ensure we can continue running our business year after year. Our profit can vary significantly from year to year depending on whether there were large scale events like storms, floods and cyclones.
What data did we use?
- The information above is based on data aggregated across all AAI Limited Motor Policies and is calculated based on the period from 1 July 2021 to 30 June 2023. The data may vary from time to time, depending on the measurement period.
- AAI Limited Motor Policies mean comprehensive, fire, theft and third party property damage, third party property damage, motorcycle, caravan and motor home policies of all the AAI Limited Brands, issued by AAI Limited ABN 48 005 297 807 between 1 July 2021 and 30 June 2023 and includes policies with all types of optional covers. It does not include CTP/MAI insurance, boat insurance or motor cover under a business policy.
- AAI Limited Brands mean AAMI, GIO, Suncorp Insurance, Apia, Shannons, Bingle Insurance, CIL Insurance, Vero Insurance and Essentials by AAI.
- Percentages are rounded to the nearest whole number.
- Where do premiums go may differ and may change from time to time. The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.
What impacts premium?
The below general information is relevant to AAMI car (including comprehensive; fire, theft and third party property damage; third party property damage), motorcycle (including comprehensive; fire, theft and third party property damage; third party property damage), and caravan (comprehensive including Australia-wide and on-site cover) insurance, unless otherwise stated. The below is not relevant for compulsory third party insurance. Please refer to your relevant policy documents for more detail.
Many factors can impact the amount of premium that we charge our customers, some key matters are set out below. In addition to change in circumstances impacting your cover, premiums are also impacted by changes in our pricing practice, pricing factors and how we calculate premium from time to time.
The amount your vehicle is insured for affects your premium. For example, luxury cars can have higher premiums as they cost more to replace as opposed to a less expensive car in the event of a total loss.
The type of vehicle you have has a significant impact on your premium. This is because the cost replacement parts vary depending on the make and model of vehicle you have.
The place where your vehicle is kept can impact your premium. Generally, a higher population density in an area means more traffic and therefore a higher chance of an incident occurring. Certain areas with higher risk of theft, vandalism and other similar incidents will also affect the premium.
A driver’s age and experience can affect the likelihood of having an accident or claim. Generally, more experienced drivers have less accidents.
Excess is the amount you ordinarily have to pay for each incident when you make a claim. If you choose a higher excess, you may be out of pocket more when making a claim. A higher excess reduces our claims cost meaning we can reduce your premium. Higher excess means a lower premium, lower excess means a higher premium.
A premium may change depending on the total amount of claims we receive each year across all policies. If we receive more claims than expected, premiums can be impacted.
Should you choose to pay monthly instalments, a higher premium is usually charged. When your premiums are paid upfront annually it is usually cheaper than paying by monthly instalments.
After we have calculated the amount to cover your car insurance risk, any applicable stamp duty, charge or levy and GST are then applied. Government taxes and charges may change from time to time.
How can I review my premium?
The below general information is relevant to AAMI car (including comprehensive; fire, theft and third party property damage; third party property damage), motorcycle (including comprehensive; fire, theft and third party property damage; third party property damage), and caravan (comprehensive including Australia-wide and on-site cover) insurance, unless otherwise stated. The information below is not relevant for compulsory third party insurance. Please refer to your relevant policy documents for more detail.
Review your policies to make sure all details are correct. Some changes can impact your premium if they affect the premium factors. Below are some ways you can influence how much premium you pay under our suite of AAMI motor products where relevant. When reviewing your policy, you should always consider your own personal circumstances and check whether your policy suits your own needs.
The amount we insure your vehicle for will also impact your premium. When reviewing your amount covered it’s important to ensure the level is sufficient for your situation.
A number of other factors can impact your premium, including;
- What you use your vehicle for? For example, your premium will generally be lower if you use your vehicle for private use compared to business use. This is not applicable to motorcycle and caravan insurance.
- Who drives your vehicle? Age and driving experience of listed drivers can impact your premium.
- How many kilometres you travel each year? The more you are on the road, the more chances there are of having an accident therefore your premium will be impacted by how far you travel each year. This is not applicable to motorcycle or caravan insurance.
If any of the details have changed it’s important to contact us to ensure you have the right level of cover at the best price.
AAMI offers a 10% discount off rated premium, where an insured (under age 25) or your child or grand-child (under age 25) and is a listed driver on the policy complete a one-day safe driver course delivered by an AAMI approved provider. This discount is only applicable to AAMI Comprehensive Car insurance policies.
A policyholder is eligible to receive a discount on their AAMI Comprehensive Car insurance rated premium on completion of the course, until the first renewal on or after the participant turns 25 as long as the participant remains a listed driver. The discount does not apply to the portion of the rated premium relating to AAMI Roadside Assist.
Discounts are also a factor that can affect your rated premium. Any discounts are usually calculated and applied before the application of government taxes and charges.
You should check your relevant policy documentation for information on discounts.
We might give you a discount for quoting for and buying a new policy online. From time to time we might also offer discounts or some other special offers as part of a marketing campaign. If we do this, separate terms and conditions may apply, and you might not be eligible for our usual discounts. The amount and type of the discount offered can change or be withdrawn at any time.
If you are eligible for more than one discount, we usually apply any subsequent discount to the already discounted rated premium.
Please note only certain discounts apply to AAMI Roadside Assist portion of the premium if you purchase that optional cover.
To make changes to your policy, log in online to your account to update the changes or give us a call on 13 22 44.
Disclaimers:
The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.
The information provided is accurate and true as of 7th September 2023, noting we may change our pricing practice (and the premium factors) from time to time.
AAMI Car Insurance, Motorcycle Insurance, NSW and SA CTP Insurance, ACT MAI Insurance and Caravan Insurance are issued by AAI Limited ABN 48 005 297 807 trading as AAMI. Read the relevant Product Disclosure Statement or Policy Document before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account any person’s particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.