The cost of car insurance rocketed by an average of almost £100 during the past year, the AA's latest quarterly pricing index shows.

In July 1999, the average cost of comprehensive cover was £464.27, but by this month the price had jumped to £561.24.

Similarly, non-comprehensive cover increased from £464.07 in July 1999 to £555.92 this month.

George Lowe, AA director of insurance, said the motor cover hikes confirmed the end of the price war that began in 1994.

He said: “We are now seeing the after-effects of this price war – insurers withdrawing from unprofitable markets, underwriters joining forces to increase their viability in the market and premiums increasing to compensate for years of loss-leading.”

Lowe warned that the highly competitive market will continue to drive some insurers to quit. Recently, Drake was forced into liquidation by the Financial Services Authority for failing to maintain a minimum solvency margin. The top seven insurers already account for about 70% of the market.

Karl Murphy, a partner at actuaries English Matthews Brockman, said premium levels would continue to rise over the coming year.

He said: “Rates are undoubtedly going to continue to go up over the next year or so. I would see increases of a further 10% - 15% – about 1% per month – reaching a plateau in about two years' time.”

The AA's index found that since July 1994, average motor premiums have risen by £194, while the cost of home insurance has fallen by £15.