As most drivers are only too aware, the cost of insurance premiums has rocketed in recent years. Many motorists who were already struggling with petrol prices have had to put up with seeing the cost of their insurance cover soar. This has been partly down to issues such as fraudulent claims and the soaring number of accident claims being put through the no win, no fee system.

However, drivers have received some much-needed good news recently after it was revealed that the cost of insurance cover has experienced its greatest drop since 1994, which is when the AA insurance index began. Insurance firms have said that the drop in premiums is down to a number of factors, including a fall in accident claims.

Factors that have affected insurance premiums

The rising cost of insurance premiums over recent years has been down to a number of factors. Similarly, it is a range of factors that have resulted in the cost of cover falling according to insurance experts. Some of the reasons behind the drop in insurance premiums across all age groups include the following.

Increased competition in the market: The increased competition that has been seen in the market has resulted in insurance firms having to work harder to secure customers, which has meant many have had to look at more competitive pricing on the cost of cover.

Improved fraud detection: With levels of insurance fraud having gone through the roof, insurance firms have had to become far more pro-active about identifying fraudulent cases. Improvements with regards to fraud detection are said to be partly responsible for the drop in premiums.

Drop in accident claims: A shake-up of the no win, no fee industry earlier this year seems to have had a positive effect on the industry in terms of falling claims. These claims have been costing the insurance industry huge sums of money, which in turn have been fed through to customers by way of higher premiums. However, with the new rules resulting in fewer claims and payouts, insurance companies have also been able to feed the savings back through to customers.

Significant drops in premiums

Figures that have recently been released by the AA show that the drop in insurance premiums has been significant over the past year. Since July 2012, the cost of third party, fire and theft cover has fallen by 4.8 per cent while the cost of full comprehensive cover has dropped by 9.8 per cent.

In April 2013, rules with regards to no win no fee claims were tightened in a bid to rein in such claims. Since that time, the cost of third party insurance has fallen by 2.2 per cent and the cost of fully comprehensive cover has dropped by 3 per cent.