Motor insurance rates have slumped by 1.74% during the first five months of 2006, according to research company Consumer Intelligence.
The fall could have been even worse. Having dropped 1.94% by March, prices recovered slightly during April and May with a lift of 0.2%.
"The fall in prices since December shows that there has been a real downward pressure on rates," said Ian Hughes, managing director of Consumer Intelligence.
"This is a very different trend from the second half of 2005 when they managed to rise 0.74%, despite the entry of SwitftCover into the market.
"It is crucial that insurers get a real view of how their position compares with that of the market."
This depressing outlook for the motor market is supported by EMB, the non-life actuaries, which revealed last week in Insurance Times that the UK motor insurance market is heading for a loss in 2006.
The study highlighted that the market only made a profit in 2005 because insurers were able to release reserves they had set aside for claims in earlier years and which they no longer needed.
EMB's conclusion was that the industry faces a rise in claims and the operating ratio increasing to an estimated 109%. It said that insurers' reserves would no longer help them to profitability.
