Car insurance premiums have risen slightly over the last quarter ending the downward trend although the cost of both home buildings and contents cover continues to fall, according to the AA's British Insurance Premium Index.

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

“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 downtrend had continued for much longer premiums may have bounced sharply up leading to the kind of double-digit increases we saw in the mid-1990's.” he added.

With regard to the continually falling home insurance premiums, Sinclair said: “Falling crime rates and few weather related claims over recent years” had contributed to them. He offered a cautionary note on the latter, saying, “Successive summers and winters with below average rainfall are leading to two potential sources for claims. Firstly, dry ground conditions lead to subsidence and, secondly, heavy rain simply runs off dry land to sometimes devastating effect, as the recent North Yorkshire storms have shown”.

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