The cost of insuring a car is rising at an annual rate of 24 per cent, even though inflation is running at little more than 2 per cent a year.
Figures out tomorrow from AA Insurance will show that premiums have increased by 2 per cent a month for the last six months.
And over the last year the price of the minium cover allowed by law - third party only - has risen by about 26 per cent.
The soaring cost of motor insurance was highlighted by Cash last November, and Luc Warner of AA Insurance says there has been no relief since: 'The market hasn't changed much.'
Rises have been hitting motorists for more than a year, and are particularly galling for those who have not claimed. To keep premiums down, they may have to accept lower levels of cover (see below).
The average comprehensive premium at the end of 1999 was 40 per cent higher than in mid-1996 according to the AA.
Warner believes premiums will continue to rise.
The Consumers' Association is to monitor the pattern of increases for signs that insurers are raising prices unnecessarily.
The insurance industry complains it is still losing substantial amounts of money on motor policies - paying out between £1.15 and £1.20 in claims for every £1 collected in premiums.
Figures circulating in the industry suggest it will report a loss of around £1 billion on this cover for 1999, down from the £1.6bn lost the previous year but still substantial.
Insurers say they are facing a volley of increasing costs. They are now being forced to pay out to the NHS after for treating drivers who cause accidents, individual claims are costing more and personal injury claims are getting dearer.
A recent report by investment bank Merrill Lynch partly blames the increasing number of cars on the road and the fact that a higher proportion of them are new ones, costing more to repair.
Another big factor is competition among insurers. Many new companies, aided by technology, have come into the market in recent years and, for a time, this kept premiums down, with plenty prepared to offer cover at a loss to get a foothold in the market.
There have been several large mergers over the last 18 months. Norwich Union is now to merge with CGU, which itself was a tie-up between General Accident and Commercial Union. The mergers have reduced competition, giving insurers the chance to raise premiums.
Merrill Lynch sees premiums rising this year, as motor insurance 'continues to be, in general, a difficult area in which to make profits'.
With premiums rising so sharply on the minimum legal cover, the Consumers' Association says it will watch for anyone raising prices to exploitative levels, beyond the amounts needed to restore profitability, or to mask inefficiency.
The AA says it is still possible to cut premiums by as much as 36 per cent by shopping around. Although even the cheapest premiums are going, up, there is still wide variation in costs.
Newer insurers, using telephone and Internet technology, continue to run aggressive price campaigns.
Peoples Choice claims to be saving motorists hundreds of pounds with a competitive charging structure. It quotes a £296 saving made by a 29- year-old woman insuring a new BMW. She was quoted £1,450 elsewhere, but £1,153 by Peoples Choice.
The AA's Warner says: 'The easiest thing is to take your renewal slip and send it off. You should never do that. Insurers are still jostling for position.'
Firms now change premiums, for new customers, much more frequently than in the past. The cheapest today may not be the cheapest tomorrow.
Other ways to cut the cost of cover include:
Seeking discounts for security devices.
Agreeing to pay more of any claim bill yourself through a larger 'excess'.
Checking insurance ratings before changing cars. They are rated according to risk in around 20 groups.
Taking extra driving lessons and a Pass Plus test, if you are under 25.
Considering abandoning comprehensive cover on an older car. Third party is the legal minimum, but a half-way house - third party, fire and theft - may do.
Don't claim unless it's vital. A lost no-claims bonus can cost money for years.
Insuring fewer people to drive the car.
If you are over 50, try specialist insurers such as Age Concern Insurance Services. But still get quotes from mainstream firms.
Seeking discounts if you cover only a low mileage, or for garaging your car.
Gloomy motorists forced to pay steep increases now should take heart, however, from the previous patterns of the insurance industry.
Warner says: 'Although it's gloom and doom at the moment, history has shown that premiums will start coming down again.'
