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Online firms drive down car insurance premiums

Costs are slightly lower after a record high

The typical motorist saw the cost of car insurance fall slightly in the first months of this year after a record high at the end of 2006, figures today revealed.

The AA Insurance Premium Index showed that the average quoted premium for an annual comprehensive car insurance policy in the first quarter of 2007 was £802, just £4 less than the all-time high.

It follows a 4.35 per cent hike witnessed in the last quarter of 2006 which saw annual premiums reach nearly £806.

Premiums in the first quarter of this year were running at around 5.8 per cent higher than for the same period in 2006.

Third party

The average annual premium paid by those who buy third party, fire and theft cover also fell quarter-on-quarter, from £999.45 to £993.28.

Kevin Sinclair, managing director of AA Insurance, said: ‘I had expected premiums to continue rising and I think the underlying pressure is still upwards.

‘Most insurers continued to apply small increases in an effort to close the gap between premium income and claims costs.

‘Some distributors – especially online providers – are taking advantage of the rising trend to offer big introductory discounts and that has checked premium averages. But there is a limit to how long they can hold back the tide.’

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