Image caption Female drivers will soon face increased premiums, says the AA

Car insurance premiums fell in the third quarter of the year, according to a regular survey by the AA motoring organisation.

After several years of big increases, premiums were flat in the first half of the year and have now started dropping.

The cheapest comprehensive policies bought directly from insurers fell by 2.9% to £870 a year.

Policies bought via price comparison web sites also fell, by 1% to an average £612.

This meant that directly purchased policies were still 6% more expensive than a year ago, while those bought from price comparison sites had become slightly cheaper in that time.

Simon Douglas of AA Insurance said stiff competition for business was putting pressure on premiums, despite the fact that the cost of claims was still rising.

"Competition is tough in the insurance market, forcing many companies to reduce premiums despite the fact that costs show little sign of abating," he said.

New rules

The motor insurance industry will go through two big changes in the next few months.

From 21 December 2012, insurers will no longer be allowed to offer cheaper premiums to female drivers, following a ruling from the European Court of Justice.

In March last year, the ECJ ruled that it was no longer legal for insurers to charge different prices depending on gender.

This will also affect the cost of buying an annuity.

Insurers have warned that female drivers, particularly young ones, will probably see their premiums rise by 25% to bring them into line with men.

Some in the industry even suggested that women's premiums may rise by more, possibly as much as 50%, and that some firms may stop offering insurance to all young drivers altogether.

Separately, from April 2013 the law will be changed to ban a practice which has helped drive up motor premiums in the past decade.

The insurance industry's widespread acceptance of referral fees, to sell information about accident victims to claims management firms or to no-win, no-fee, law firms, will be made unlawful in personal injury claims.

Also, anyone suing for accident damages with the help of a no-win, no-fee lawyer - known as a conditional fee arrangement - will in future have to pay their lawyer's success fee from their own funds if they win their case and not add it to the bill of the losing party.

This will make claims more expensive to pursue.

Meanwhile, the government intends to consult on ways to cut the number and costs of so-called "whiplash" claims which come to court.

Insurers have identified these as one of the main causes of the rapidly rising cost of motor insurance, arguing that in many cases, the claims are fraudulent or too difficult to contest under the present rules.

Changes might include raising the small claims limit for personal injury cases from £1,000 to £5,000, so that more claims are dealt with cheaply in the county courts, and also bringing in independent medical panels to decide if a whiplash claim is genuine or not.

"Whiplash injury claims continue to pour in and under current legislation, they are difficult for insurers to reject, even if they think they may be fraudulent, because it is difficult to prove whether or not a claimant has suffered," said Mr Douglas.