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Rise in car insurance premiums

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The average fully comprehensive car insurance policy rose by a third to £843 last year, the AA's British Insurance Premium Index has shown.

Over the last three months of 2010, car insurance premiums jumped by a further 6.4% - adding £51 to the cost that motorists have to pay for a policy.

Young drivers have suffered the brunt of the increases on fully comprehensive premiums. Those aged 17 to 22 years saw their premiums reach £2,251, up more than 58% year-on-year.

Third party, fire and theft insurance increased by more than a quarter in the last three months to £1,390, up over 70%.

Simon Douglas, director of AA Insurance, said: "There has been no let-up in premium increases as insurers struggle against losses from 2009, when for every £100 taken in premiums, £123 was being paid out in claims.

"This has led to the biggest annual premium increases we have seen since the AA Index began in 1994."

Mr Douglas said that rises in premiums in 2010 had led to a House of Commons Transport Committee inquiry into the car insurance market.

He added: "I hope that as a result of the inquiry, the Government is able to help the motor insurance industry stem haemorrhaging costs."

© Press Association 2011