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AA reveals "modest rise" in car insurance premiums

11 July 2005
The recent downward trend in car insurance premiums has reversed with new AA figures showing a modest increase over the last quarter.

The AA's latest benchmark British Insurance Premium Index found that despite the slight rise in car prices, the average quoted comprehensive car premium was still no more expensive than in January 2003.

After the increase of £7 on average, it now sits at £757 per annum.

In comparison, the cost of both home buildings and contents cover has continued to fall.

"Tough competition in the car insurance market has helped to keep the lid on premiums over the past couple of years, despite steadily rising claims costs," explained the managing director of AA Insurance, Kevin Sinclair.

"I think this modest rise is common sense for the industry and, I believe, will turn out to be the best solution for customers.

"If the recent downward trend had continued for much longer premiums may have bounced sharply up leading to the kind of double-digit increases we saw the mid-1990's.

He added: "While the risk of a sudden hike remains, modest increases make this less likely."

Meanwhile, home buildings insurance premiums fell again for the sixth successive quarter to £203.

They are now cheaper than 11 years ago when the AA Index started.

To read more about car insurance, click here.

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