AA insurance survey says car insurance premiums falling

Car and home insurance broker the AA has announced that car insurance premiums are falling, dispelling claims of a rise over the last year.

Kevin Sinclair, managing director of AA insurance, rejected allegations that car insurance premiums had risen by nearly a third as "fanciful".

"The AA's benchmark British Insurance Premium Index, which tracks premium quotations from more than 50 providers, shows the opposite to be true," he argued.

Mr Sinclair explained that premiums had been under pressure "for some time", saying that over the past year, typical comprehensive car insurance premiums had fallen by 3.3 per cent.

In the first quarter of 2005, they fell by 0.7 per cent, he added.

However, he said that car insurance premiums would not continue to fall due to rising claims costs.

"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," he warned.

"Brokers such as the AA will play a critical role in helping to steer customers through the maze of costs and cover options available."