The cost of car insurance has risen for the second quarter in succession, according to the latest AA British Insurance Premium Index .

The average premium for comprehensive insurance is up 1.41 per cent in the last three months, with premiums for third party, fire, and theft insurance up 4.62 per cent.

It has long been clear that the increasing cost of meeting both accident damage and personal injury claims would eventually have to be absorbed by increased premiums, said Kevin Sinclair, managing director of AA Insurance .

The increase is long overdue. Premiums have been kept artificially low by the entry of new insurers seeking market share and the growth of internet sales, coupled with underlying poor results hitting insurers' accounts .

Some companies will still hold back premiums for short-term gain but I expect other companies to follow Norwich Union’s lead [and raise their premiums] Two quarters’ rises may not be a trend but I believe average quoted premiums will continue to go up.

And these rises are hitting young drivers hardest.

Mr Sinclair said, One in eight drivers is aged 25 and under, yet account for a quarter of all road fatalities a shocking statistic of great concern to the industry .

Young people, who are a large proportion of the third party cover market, are paying the price and suffering the brunt of recent premium increases.

The average premium being paid is now pence short of £1,000.

Many companies don’t insure drivers who are under 21 and it’s likely that others will review their approach to young drivers.

The average fully-comp premium is now £772.13, however this is still lower than the peak recorded in December 2003 of £777.57.

But while the average is up the ‘shoparound’ premium an average of the lowest three premiums for each risk quoted in the index fell by 1.35 per cent to £458.81.

Average third party, fire and theft cover is now £998.21, this is 21 per cent higher than two years ago and double the level recorded since the index started in 1994.