Premiums could skyrocket later this year, AA analysis has suggested.
Britons will face sharply increasing car insurance costs in future, a major provider has predicted.
The AA released new quarterly figures for the sector yesterday, showing that the typical premium had gone up by 1.3 percent over January-March 2009. This is the first increase for the first three months of the year in five years - and signifies sharper rises to come.
Both the "average quoted" index, which takes premiums data from across the market, and the "shoparound" index, including the three best-buy products for different sets of customers, registered rises. The overall average annual cost of car insurance for the first quarter was revealed to be £751.60.
Simon Douglas, director of AA Insurance, said: "This increase is a significant indication that insurers are determined to address past underwriting losses this year, as we predicted last year. Premiums tend to fall a little during the first three months of the year. It's when most car insurance renewals take place while the new March car registration change prompts customers to look for new insurance cover, so competition between insurers tends to hold premiums in check."
Mr Douglas added that three major sources of strain for the industry were underwriting losses, falling investment revenue and an overall rise in costs. Fraud, which is thought to add around £40 to every UK car insurance premium, was identified as a particular problem.
