The internet will completely replace the high street for buying car insurance within the next three years, according to one of the leading figures in the industry.

The AA said that the current rate of growth on the internet is more impressive than that reported by call centres when they revolutionised the industry in the late 1980s.

"In terms of volume, shops accounted for 80% of our insurance sales in the late 1980s, but the growth of telephone use turned the market on its head," said the AA's insurance sales and marketing manager Peter Fisher. "And two years ago, fewer than one in five policies we sold were bought in a shop."

However, the rate of growth in internet use among AA customers is even more dramatic. Its on-line car insurance quote system saw a ten-fold increase in activity during 1999. Five per cent of customers buy cover this way.

Premium increases in the market, which started to take effect last year, should see further growth in the numbers choosing to go on-line for a more competitive quote.

The AA says that 20,000 motorists are receiving on-line quotes per month with 1,000 electing to buy their insurance on the web. Customers are heavily incentivised to buy on-line with an automatic ten per cent discount offered.

"By 2003, we estimate that the internet will represent at least 15% of sales, and within the same timescale, we will see an increasing demand from customers to renew cover and adjust their policy details on-line," said Fisher.

"Every page on our web site has a 'call me' option which is currently used by two to three per cent of browsers. This gives customers the reassurance of help with they need it, the freedom to do business as and when it suits them, and to take advantage of lower prices."

The AA closed its last high street broker in July. At one time there were more than 200 AA-branded high street brokers throughout the UK.