Insurance Showdown

Reporter: Helen Wellings

The car insurance competition is cut-throat with the cheapest premiums ever for families, young drivers and retirees.

70% of the market has been controlled by just two heavyweights, IAG and Suncorp, which own all the familiar insurance companies. But in the past few years, dozens of new players, including Coles, a month ago Woolworths, even Australia Post, KMart, and a host of on-line players, are causing the biggest price shake-up in history.

"Australians have been generally ripped off with insurance for a long time", said Rohan Gamble, Managing Director of Mozo.com.au.

Mozo.com.au helps you find the top insurance deals. "Coles and Woolworths always are head to head; they're always competing on milk prices, bread prices, lamb prices, and now they're competing on insurance prices", Rohan said.

70% of drivers take out comprehensive insurance, rather than the minimum third party -- to cover them for damage to their car and other's cars and property -- but you can pay far more than you need to.

"There's huge value in comparing. You could save hundreds of dollars, in some cases even thousands" said Peter Arnold, of price comparison website, RateCity.

Business analysts Canstar has compared companies premiums across all states and found the same driver under 25 can pay anywhere between $623 to $3,285 - that's five times more; 30 to 59 year old $420 to $1,519; and the same mature driver over 60 can pay between $370 and $1,453. "If you don't compare, you'll never know how much you could save", Peter said.

Peter says one of the traps that can cost you thousands long-term is customer loyalty discounts, especially pushed by the large established companies. "If you can compare the market and you can be 100% confident you're getting the best deal, and then take the bonus on offer. The problem is these schemes are designed so you don't compare and you may miss out on a much better deal", Peter added.

Woolworths and Budget Direct are backed by international giant, Hollard Insurance, Coles by Westfarmers; while Progressive 100% on-line insurance is the world's biggest insurer based in America. "Absolutely, they're here to play the game aggressively", Rohan said.

We crunched the figures -- comparing 13 different companies premiums for a young driver, a middle age parent, a retiree.

First is 28 year old male renter in inner-Sydney Alexandria, driving a 2005 Toyota Corolla -- exactly the same details given to each company. The cheapest 5 were AAMI by far at $747, then Woolworths with $1,002, Budget Direct was third cheapest at $1,079, followed by Virgin Money $1,102 and Australia Post, $1,115. Most expensive were NRMA $1,509, Suncorp $1,513 and CGU at $1878.

"Some companies are willing to go after the higher risk people and offer them lower premiums, they might have a few more conditions on their policy", Peter said.

Next is a 42 year old family man, living in Melbourne's Ringwood, driving a 2009 Toyota Kluger. The cheapest was AAMI at $666, GIO $693, Suncorp $757, Woolworths $794, Coles $812. The dearest were RACV $995 and CGU at $1,459.

Now, a 65 year old female retiree, good driving record, in Brisbane's Mt Gravatt driving a 2011 Holden Commodore. The cheapest premiums were Budget Direct $382, Virgin Money $390, Australia Post $395, Woolworths $455 and Coles $470 again come in below average price. The most expensive, CGU $662, Suncorp $667 and the dearest was Apia - which targets the senior's market -- at $741.

"What we always say to people is you have to get your own individual quote, insurance is something relevant to you, so even if someone says they got a great deal at an insurance company, it doesn't mean you will", Rohan said.

We again checked Apia premiums using the same retiree profile as before, but in different postcodes. Our six quotes ranged from $470 to $965, average $635 -- still very high.

So some advice when shopping for a premium: don't just focus on the price or accept the quote; you can also save money by opting for a higher excess, restricting the number of drivers and upgrading the security of your vehicle. "Competition is good for all of us it means cheaper prices, better service it means more options and in the long run it means we're all better off", Rohan.

For further information:

Rate city: www.ratecity.com.au/car-insurance

Mozo: www.mozo.com.au

Canstar: www.canstar.com.au