Car insurance costs drop marginally

There was a slight reduction in the cost of car insurance in the first quarter of 2007, the AA has revealed.

According to the association’s latest research, the average cost of an annual comprehensive insurance policy fell from £806 at the beginning of the year to £802 at the end of the quarter.

This follows the substantial 4.35 per cent increase in costs that occurred in the final quarter of 2006, which brought typical car insurance premiums to an all-time high.

A similarly marginal fall was recorded for third party, fire and theft cover, with average prices for these packages standing at £993 at the end of March.

However, Kevin Sinclair, managing director of AA Insurance, predicted that these price reductions may only be a temporary trend.

"I had expected premiums to continue rising and I think the underlying pressure is still upward. Most insurers continued to apply small increases in an effort to close the gap between premium income and claims costs," Mr Sinclair said.

"I believe that we will see further increases as the year progresses."

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