Cost of car insurance falls 3.2 per cent

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During the first quarter of this year the AA says the average cost of a comprehensive policy fell by 3.2 per cent to 968 pounds. However, the group expects double-digit rises again later this year.

Car insurance providers typically hold their premiums during the first quarter, the researchers said, when competition for business is greatest, as most policies are renewed during the first three months of the year.

It added that the price fall was also driven by a drop in some expensive broker rates, bringing them more in line with the market average.

But the AA warned that the cost of motor cover was likely to resume its upward trend during the coming two quarters.

Simon Douglas, from the AA, said: "Insurers no longer have reserves on which to call in order to keep rises in check.

"The same pressures as last year continue to force insurers to increase premiums: fraud and personal injury claims especially remain a significant concern."

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