The average cost of a motor policy is now 10% cheaper than in 2013

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The cost of motor insurance inched up 0.2% over the final quarter of 2014, according to figures from the AA.

The average comprehensive motor policy cost £540.26 at the end of 2014, and the final quarter of last year is the second successive period of increases – prices rose 1.2% in Q3.

However, the increase in premiums over the second half of 2014 was not enough to stave off a 10% decrease over the year.

AA Insurance managing director Janet Connor said that, despite the faltering movements recorded by the British Insurance Premium Index, she expects insurers to continue to push for premium increases over 2015.

“Some insurers may have lost business by increasing premiums, leading to a ‘year-end sale’ to boost market share,” she said. “Car insurance is extremely competitive.  Nevertheless the underlying trend is upward, although I think premiums will struggle to rise past 10% by the end of the year.”

Connor added that falling premiums over the past couple of years have had more to do with competitive pressure rather than any supposed benefits brought by the Ministry of Justice in its Legal Aid, Sentencing and Punishment of Offenders Act (2012) (Laspo).

“The number of personal injury claims is now higher than before the Justice Ministry reforms were introduced,” she said. “Over the 12 months ending March 2014, the average number of claims was 66,000 per month.  They now stand at an average of nearly 71,000 per month.

“As a result, current premiums are simply unsustainable.”

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