Motor and home premiums continued to slide in the first quarter of 2005 according to the AA's latest British Premium Index.
Both comprehensive motor rates and buildings insurance dropped nearly 1% in the first three months of the year.
Motor claims costs over the same period rose by up to 2%.
AA director of insurance Kevin Sinclair said: “That (2% claims inflation) might not sound much but with low inflation, and thus low investment income, insurance companies won't be able to keep premiums at their current low levels indefinitely.”
According to the AA, average comprehensive motor cover now costs £750, buildings insurance costs £206.75 and contents costs £150.12.
