The average quoted premium for an annual comprehensive car insurance policy rose by 1.3 per cent over the first quarter of 2009, the AA found in its insurance premium index.

Simon Douglas, director of AA Insurance, said: "Although 1.3 per cent may not sound much, premiums fell during the same period in each of the past five years, so this increase is a significant indication that insurers are determined to address past underwriting losses this year, as we predicted last year."

The average quoted premium, based on data from over 80 insurance providers on a basket of 1,000 'customers', rose by 1.3 per cent to £751.60.

The rise in prices is unusual for this time of year, Mr Douglas added. "Premiums tend to fall a little during the first three months of the year.

"It's when most car insurance renewals take place while the new March car registration change prompts customers to look for new insurance cover, so competition between insurers tends to hold premiums in check.

"But the industry is facing escalating costs, falling investment income and underwriting losses. Premium rises are therefore inevitable."

Motor insurers blame a rise in personal injury costs and higher levels of fraud during the downturn, as well as falling income from investments for the sharp rise in costs.

But the AA added that their 'shoparound' index, an average of lowest three premiums for each 'customer' rose by just under one per cent to £504.38, compared to the average premium of £751.60 – underlining the benefit to comparing the market.