The AA has called on motor insurers to increase premiums to combat continued rising claims costs.

The call comes as the broker published its latest Insurance Premium Index, which showed comprehensive premiums rose by less than 0.5% in the last quarter.

In the previous quarter premiums fell by 0.5%, according to the AA's figures.

Kevin Sinclair, managing director of AA Insurance, said: "Rising costs are still failing to overcome downward pressure on car insurance premiums.

"Industry estimates suggest that this year the cost of claims has already exceeded premium income by around 9% and this can't continue indefinitely."

He added: "Premiums must rise sooner or later - and the later it happens, the greater the pain.

"It would be better for customers if the slight rise we have seen over the past quarter were the first sign of an upward trend."

The motor market failed to make a profit in 2005, producing a combined operating ratio of 102.2%. This came despite a larger than expected release of reserves that masked an underlying combined operating ratio (COR) of 104%.

Experts are predicting that 2006 will produce an even worse result unless rates increase significantly.

Catherine Barton a partner with professional services firm Deloitte said the private motor market's COR could slump to as much as 110% this year.

"It is worrying. Without significant rate increases there is one way the market will go and that is down."

' Buildings premiums fell by 0.5% in the last quarter, according to the AA. In contrast, contents insurance premiums increased by 0.15%.