The average premium quoted for comprehensive car insurance fell during the first three months of this year, according to latest data from the AA.
By the end of last month, the average Shoparound quote, based on the five cheapest premiums from insurers had dropped by 1.1 per cent to £1,132.
Over the year to March 31, the Shoparound index rose by 7.7 per cent, the smallest 12 month increase since 2008.
While still higher than inflation, it is significantly lower than the record 40.1 per cent annual increase recorded in April 2011, the AA said.
The study found that the average of all quotes in the index showed hardly any change in premiums, with the average quote for comprehensive cover still £1,452.
It found that some insurers are heavily discounting to attract new business, but others have continued to increase premiums.
Simon Douglas, director of AA Insurance, said the fall in the Shoparound quotes is welcome news for drivers who have seen record premium increases over the past two years.
But he added: “I can't see this drop in premiums being sustainable for long.
“My fear is that if prices do continue to drop, we’ll see a repeat of 2009, when industry losses led to premiums suddenly rocketing up following a long period of little movement.”
Young male drivers aged 17 to 22 also saw their premiums fall by almost one per cent over the quarter, but policies for young women increased by 4.8 per cent, the figures reveal.
From December, a European Court of Justice ruling means that insurers will no longer be able to use gender as a means of calculating insurance premiums. Young drivers will be particularly affected as young women pay premiums up to 40 per cent less than their male counterparts.
“The latest figures suggest that insurers are starting to adjust their pricing ahead of the ruling, particularly for young drivers,” Mr Douglas said.
“After December, young women can expect to see premium increases of up to 25 per cent.”
However, Mr Douglas said telematic or ‘black box’ insurance points the way forward particularly for young and inexperienced drivers.
"I expect this type of cover to become increasingly mainstream,” he said.
“It is gender-neutral and measures driver performance against criteria such as speed, time of day, cornering and braking and can bring significant premium reductions for safe drivers.”
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