With prices tumbling it has never been a better time to get a good quote for car insurance. Our secret shopper contacted a range of telebrokers to check on price and service

Incredible as it may seem, a new price war is looming in motor insurance. For over a year, insurers been taking a holier than thou attitude to rates, arguing higher premiums are the only way to deal with soaring claims and perilous solvency positions.

Last year, online bank Egg announced it planned to freeze motor insurance premiums for two years. Other insurers said they had no plans to follow suit. But, behind the scenes it is another story. A number brokers say the price war is alive and kicking.

Richard Mikula, principal of north London Topaz Insurance Brokers says: "Churchill and Tesco are the main culprits. Whatever insurers say about the benefits of putting rates up, the actual situation is that they are bringing them down. They are saying one thing and doing another."

Tesco is underwritten by UK Insurance, which is owned by Direct Line. He explains that brokers are losing out to these two direct providers, although Churchill-owned NIG has also cut its rates. "It's interesting that Direct Line is often no longer the cheapest - we can now take business off them. But, Churchill and Tesco come in at far less.

"While I don't want to see rates fall, as it is bad for the market long-term, in practical terms with NIG now, we'll often find we can come within reasonable distance."

Some insurers have already stated they are concerned about suicidal rates. Groupama director of motor Jack Brownhill says: "We are campaigning for rates to remain at a sustainable level. Direct Line, it seems, is going for quality customers and is now offering courtesy cars an option. But, subsidiary UK Insurance seems to be going for the cheapest rates in the market. I hope this is the company's game plan based on volume. If not, it could be bad news. It seems that the industry never learns the lessons of the past."

Insurance Times mystery shopper test drive
The Risk
A female driver, single aged 38.

A clerical worker, living in Brighton, East Sussex.

Owner of a five-door Vauxhall Astra 1.41 LS, 16V, 1999.

Average 10,000 mileage, value £4,600.

No convictions, car parked in drive. five-years protected no claims discount.

A range of providers of motor cover were contacted to see if they were selling on price and what service was on offer.

To download a PDF of this article as it appears in the magazine click here .