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Sharp fall in car insurance premiums

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According to the AA there has been a sharp fall in car insurance premiums, with the average price falling by more than £100. For the first three months of 2014, the average ‘shoparound’ figure for comprehensive motor insurance, which involves quotes from a number of markets, had dropped to £531. This was a drop of 5.6% on the figure for the final three months of 2013 and it was 16.6% down when compared to the figure for January-March 2013.

The figure for third party, fire and theft for January-March 2014 was £725, which showed an 8.4% fall on the final three months of last year and it was 18.5% down when compared to the figure for the first three months of 2013.

During the first part of this year, young drivers, who need to pay the most for comprehensive insurance, had enjoyed the biggest drops in premiums with the cost for 17 to 22 year olds falling by 20.5% when compared to the first three months of last year. 23 to 29 year olds had also seen a fall of 19.9%.

The north west of England has seen the largest fall in premiums with 20.9% at the start of this year, while the smallest falls were in Anglia with 13.3%.

There was a warning from the AA however that this could be the end of the good news for motorists. Simon Douglas, AA Insurance director, said ‘Legal reforms introduced by the Justice Ministry to curb organised attempts at whiplash injury fraud coupled with better fraud detection by insurers have also certainly helped put downward pressure on premiums. But despite this there is no evidence that this is delivering any significant reduction in the number and value of personal injury claims.’

Mr Douglas continued ‘I do expect premiums to start rising again this year unless the fraud issue can be dealt with. If not, it’s likely to be young drivers, those with a poor claims history or those in localities where there are frequent claims who will find it most difficult to obtain competitive cover.’

Chris Grayling, Justice Secretary, said ‘We are turning the tide on the compensation culture and doing our bit to help drivers with the cost of running a car. We have made major law changes which have been a significant factor in these record falls in car insurance premiums. But we want to do more, and we are now going after the fraudsters who force up the costs for everyone else.’

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