Car insurance premiums falling, says AA

Claims that car insurance premiums have been substantially rising over the past year have been dismissed by the AA.

"The idea that car insurance premiums have risen by nearly a third is fanciful," says Kevin Sinclair, managing director of AA insurance. "The AA’s benchmark British Insurance Premium Index, which tracks premium quotations from more than 50 providers, shows the opposite to be true.

"Premiums have been under pressure for some time and over the past year, typical comprehensive car insurance premiums have fallen by 3.3 per cent. And over the first quarter of 2005, they fell by 0.7 per cent.

"We are in a highly competitive market place which has seen new entrants and online providers discounting to gain market share. The evidence for this in the AA’s ‘Shoparound’ index, which averages the three lowest quotes across the Index basket of 500 risks," Kevin Sinclair says.

However, he does believe that the days of falling premiums must end. "Claims costs continue to rise and with low inflation, and thus low investment income, premiums will need to go up if customers are not to be faced with double-digit increases in the future. Brokers such as the AA will play a critical role in helping to steer customers through the maze of costs and cover options available."