According to the AABIPI, the average comprehensive annual car insurance policy fell by over 12% for the 12 month period ending 30 September 2013.

The firm said that the drop in the 3rd quarter of 2013 for its “Shoparound” quote to £568.32 – an average of the five cheapest premiums quoted for each client in a nationwide basket of risks – meant the annual fall was the biggest since the index was introduced in 1994.

The Director of AA Insurance,Simon Douglas, commented “These drops are dramatic and many insurers are reducing rates based on anticipated savings from new measures in the Legal Aid, Sentencing and Punishment of Offenders Act (Laspo) 2012.” Simon did comment that the impact of Laspo had thus far been relatively small.

Mr Douglas also added “While there have been some reductions in the size of claims there is little evidence yet of a fall in the number of personal injury claims, particularly whiplash injury,” “There has been a lot of talking and investigation into the car insurance market. Finally premiums are reflecting anticipated law changes.”

Additional details of the index survey revealed that both old and young drivers had seen the smallest premium reductions overall, with average falls of 4.8% (to £413.11) and 4.6% (to £1,198.96) respectively over the past 12 months. A reduction for young drivers is always welcome but statistics for cheap taxi insurance were not included.

The luckiest drivers aged between 23-29 saw the biggest annual premium reductions on average (15.5% to £704.00) followed by those aged 30-39 which came in at (13.6% to £492.51).

Drivers in Scotland will be pleased to know that they enjoyed the biggest premium falls over the past quarter (5.5% to £424.04). In fact Scotland remains by far the cheapest place to insure a car in the UK. Despite being known as a more rural county, the smallest reduction was in East Anglia (1.4% to £538.64).