The latest benchmark AA British Insurance Premium Index has recorded a 0.5% fall in the average premium quoted for comprehensive car insurance, continuing a two-year trend of relatively static premiums.
The fall comes alongside an increase in the number of claims. Kevin Sinclair, managing director of AA Insurance, said: "Although there is little sign of it now, I still believe present premiums will prove to be unsustainable and
will have to start rising before long.
"Insurers are paying out more, yet average quoted premiums are falling - it just doesn't add up."
The gap between comprehensive and third party, fire and theft (TPFT) car insurance, widened markedly, according to the Index. The slight fall in comprehensive insurance contrasted with a 1.75% rise in the average quotation for TPFT for the fifth quarter.
Sinclair said one reason for this was that competition for comprehensive car insurance remained strong and that new channels and insurers are forcing existing providers to increase spending on advertising, a method which almost exclusively focuses on premiums, to maintain market share.
The AA Index also showed buildings premiums appeared to be following an upward trend, having risen by a little more than 0.5%, the fourth successive increase.
The rises are said to be within expectations although Sinclair speculated that the figures masked wider extremes in the premiums homeowners pay.
