April 25, 2012 / 1:57 PM / 7 years ago

Car insurance prices unchanged since January - AA

Newly built Vauxhall cars are loaded onto transporters outside the company's plant in Ellesmere Port, northern England, March 28, 2012. REUTERS/Phil Noble

LONDON (Reuters) - A three-year rise in car insurance prices has come to a halt, a closely-watched survey found, weighed by a fresh profusion of cheap deals from insurers keen to expand their market share.

British drivers pay, on average, 1,542 pounds for a year’s comprehensive insurance, unchanged from January, and up by just 3 percent over the year as a whole, according to the survey from insurer and roadside recovery group AA on Wednesday.

That compares with increases of up to 40 percent between 2010 and 2011 as insurers hiked their prices to protect themselves against a surge in claims driven by the growing influence of “no win, no fee” lawyers.

The government has taken steps to stem the rise in claims, including a ban on lawyers paying referral fees to those who pass on the names of accident victims to them.

The AA said that while legislative changes should help curb the rise in claims, motor insurers’ costs were still rising at about 10 percent a year, putting the industry under pressure to resume increasing their prices.

“The industry is still having to deal with fraud as well as increasing numbers of personal injury claims, despite the number of crashes on Britain’s roads falling,” said Simon Douglas, the AA’s Director of Insurance.

Analysts said the flattening of premium rates was bad news for motor insurers grappling with intense competitive pressures and facing regulatory probes into lucrative alternative sources of income such as supplying customers with replacement vehicles.

Britain’s biggest motor insurers are Royal Bank of Scotland (RBS.L), owner of Direct Line Group, Admiral (ADML.L), Aviva (AV.L) and RSA (RSA.L).

($1 = 0.6192 pound)

Reporting by Myles Neligan; Editing by Helen Massy-Beresford

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