Car insurance premiums have become slightly cheaper for consumers who shop around to get the best quote, but the decreases are unlikely to last long, a study found today.
The "shoparound" quote for comprehensive cover, based on the average of the five cheapest premiums from insurers, dropped by 1.1% in the first quarter of this year to reach £1,132, the AA British Insurance Premium Index found.
Over the year to March 31, the shoparound index rose by 7.7%, the smallest annual increase since 2008, which is above inflation but much lower than a record 40.1% 12-month increase in April 2011.
Young men aged between 17 and 22 saw their shoparound premiums fall by almost 1% over the quarter to £3,515, but those for young women in this age group increased sharply by 4.8% to £2,330.
From December, a European ruling means insurers will no longer be able to use gender to calculate premiums, which is set to particularly affect young drivers as young women pay premiums of up to 40% less than their male counterparts.
The latest figures indicate that insurers are already starting to adjust their prices ahead of the new rules, the study said.
Simon Douglas, director of AA Insurance, warned that the factors which have helped to create big increases in premiums over the last two years have not gone away.
He said the industry is still dealing with fraud as well as increasing numbers of personal injury claims, with industry costs rising at around 10% per year.
Mr Douglas said: "I can't see this drop in premiums being sustainable for long. My fear is that if prices do continue to drop, we'll see a repeat of 2009, when industry losses led to premiums suddenly rocketing up following a long period of little movement."
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The study also found that the market average of all quotes in the index showed "almost no premium movement", with the average quote for comprehensive cover remaining at £1,452.
It found that while a few insurers are heavily discounting to attract new business, others have continued to increase premiums.
