Car insurance premiums in first quarter fall by over £100

The AA uses its British Insurance Premium index to track the movement of car insurance premiums through each quarter of the year. A combined analysis of brokers and price comparison websites is done to achieve this tracking process.

From its latest findings, the AA reports that the average cost of comprehensive car insurance cover was £531 in the first three months of 2014. This figure is £31 or 5.6 per cent less compared to the previous quarter – the last three months of 2013.

The average price is also £105 or 16.6 per cent less compared to the same three month period of 2013.

Meanwhile the average price for third party, fire and theft cover was found to be £725. This represents an 8.4 per cent reduction from the last three months of 2013 and an 18.5 per cent reduction on the first three months of last year.

Out of all insurance age groups, young drivers in the 17-22 years old category have seen the biggest average drop so far this year. The average insurance premium for drivers in this age group is now £1,158.

The age bracket which paid the cheapest average price for car insurance at the start of 2014 was those aged between 60 and 69. The average premium for this age category in the first three months of 2014 was just £299.81.

Factors including last year’s introduction of tougher whiplash claim regulations and increased competition are likely reasons for the reductions in average insurance premiums. However, the AA has warned that this downward trend could only be temporary.

The insurance director for the AA, Simon Douglas, commented: "Legal reforms introduced by the justice ministry to curb organised attempts at whiplash injury fraud coupled with better fraud detection by insurers have also certainly helped put downward pressure on premiums.

"But despite this there is no evidence that this is delivering any significant reduction in the number and value of personal injury claims."

Douglas added: "I do expect premiums to start rising again this year unless the fraud issue can be dealt with.

"If not, it’s likely to be young drivers, those with a poor claims history or those in localities where there are frequent claims who will find it most difficult to obtain competitive cover."