2025 car insurance trends and predictions

From AI to telematics and questions about regulation, the Australian car insurance space might just be more exciting than you thought.  And if you’re curious about what’s next, you’re in the right place.

After all, last year’s predictions landed us a solid 2.5 out of 3. This time, we’re ready to take another shot and see if we can do even better in 2025.

Will we go 4 for 4 this time? Only time will tell, but for now, here’s what we’re betting on for 2025!

1. Telematics in car insurance: finally gaining traction

Telematics-based car insurance has had a bumpy road in Australia. Early offerings from some insurers fizzled out, but interest is picking back up. 

KOBA has been offering its pay-per-km product for a while now, and ROLLiN' recently expanded its Safe ‘n Save app to the general public after what was evidently a successful trial with its business customers. The pieces certainly seem to be in place for telematics to finally take off big time, as more consumers look for personalised and potentially cheaper insurance options.

Prediction: In 2025, at least one major Australian insurer will launch its own telematics-based insurance product, responding to the growing popularity of usage-based models like KOBA and ROLLiN'.

2. AI in car insurance: still in the testing phase

AI is a hot topic in the car insurance industry, with plenty of talk about how it could transform a multitude of internal processes like fraud detection and claims handling.

For now, though, it’s still in its infancy. Insurers are trying out different ideas, but nothing big has come out of it yet—certainly nothing that customers would notice. Perhaps with so many possibilities, insurance companies are still not sure where to deploy AI first.

Prediction: Australian insurers will continue experimenting with AI in 2025, but no significant customer-facing innovations are likely to launch in the coming year.

3. AI regulation struggles to keep up

With telematics expanding and AI increasingly integrated into claims and underwriting, you might expect Australia’s regulatory bodies to step in and address concerns like privacy, transparency and fairness. 

But even in a well-regulated country like Australia, regulation often lags behind technology, leaving new tools like AI and telematics to develop faster than the policies meant to oversee them.

Prediction: Despite growing concerns around telematics and AI in car insurance, no significant regulatory actions—like inquiries or new guidelines—will occur in 2025, leaving insurers largely free to innovate.

4. Self-driving cars raise a different set of questions

Self-driving car trials are already happening in Australia, but we still don’t know: who’s responsible in an accident? Is it the vehicle’s owner? The manufacturer? The software developer?

As trials expand, this question is becoming harder to ignore. Without clear rules, progress could easily stall. That’s when someone will need to step in to outline potential solutions and gather feedback.

Prediction: In 2025, Australia’s regulators will release a draft framework or consultation paper seeking feedback on liability rules for autonomous vehicles.

With the predictions out of the way, why not take a look at some of the top car insurance options available today?