Car insurance price fall is 'last hurrah'

THE PRICE of car insurance premiums is plunging, according to the AA.

Average premiums fell 19.3% in the year ending June 30 2014 - the largest 12-month decrease since the AA index started 20 years ago.

But the AA warned this could be the "last hurrah" for cheaper premiums and said the number of claims remained "stubbornly high" despite Government reforms to curb fraudulent injury claims.

The average quoted "shoparound" premium for annual comprehensive car insurance now stands at £504.29 with the price for the last three months dipping 6.1% compared with the figure for the first three months of this year.

The current average for third-party insurance is £679.32 - an 8.3% dip on the average for January-March 2014.

Looking at figures for the last three months, drivers aged 17-22 are still, on average, paying the most for insurance - at more than £1.096. But this figure is 7.5% down on the average for the first three months of 2014, with those aged 23-29 enjoying falls of 7.8%.

The smallest decrease over the last three months year - of 2.6% - has been for drivers aged 70 or over, while those paying the least for insurance are those aged 60-99 (£302 on average).

Over the last year, insurance for 17-22 year olds has fallen 24%, while for 25-29 year olds it has gone down 22.6%.

By region, the biggest falls over the last 12 months have been in north west England (down 24.1%) and in Scotland (down 21.3%).

AA Insurance director Simon Douglas said: "This could be the 'last hurrah' for cheaper car premiums. These falls are now becoming unsustainable as insurers are digging into reserves to maintain their competitive edge. Some insurers are starting to resist pressure to cut premiums."

He added: "Although the number of injury claim lawyers cold-calling potential claimants has sharply fallen thanks to the (Government) reforms, the number of claims remains stubbornly high."

By Peter Woodman, Press Association