THE average cost of car insurance fell slightly over the first quarter of 2007, after ending last year at an all-time high, according to the AA’s British Insurance Premium Index.

The average quoted premium for an annual comprehensive car insurance policy fell marginally, ending the first quarter of this year at £802. This is £4 less than the 2006 year-end’s all-time high of nearly £806 following a 4.35% increase during the last quarter and a 6% increase during 2006 as a whole.

The average third party, fire and theft (TPFT) premium also fell by a similar percentage, to £993.

'I had expected premiums to continue rising and I think the underlying pressure is still upward. Most insurers continued to apply small increases in an effort to close the gap between premium income and claims costs,” said Kevin Sinclair, managing director of AA Insurance.

'Some distributors – especially online providers – are taking advantage of the rising trend to offer big introductory discounts and that has checked premium averages. But there is a limit to how long they can hold back the tide.'