While annual premiums fell 4% overall, the average price paid by consumers in the last quarter of 2014 was £372, 1% higher than Q4 2013.

James Dalton, the ABI’s Director of General Insurance Policy, said: “The motor insurance market remains highly competitive, with insurers delivering on their commitment to pass on savings to customers following the introduction of reforms to the civil justice system.

“In 2014 we have seen an increase in low value claims starting to feed through into pricing. This is not surprising as rising economic confidence, high employment levels and falling oil prices have seen more cars on the road and greater use of cars for work and business use which increases accident volumes.

“The introduction of MedCo in April to oversee the production of independent medical reports in whiplash claims should deter the cheats and ensure honest motorists continue to get competitively-priced motor insurance.”