The price of motor insurance has fallen by 10 per cent in the last 12 months, according to the AA. The motoring and financial services group based its claim on a survey carried out on its behalf by Catalyst Market Research which found that on average premiums have fallen by €100.

Premiums have been falling steadily since the start of 2003, according to the organisation, but the pace at which they are declining is starting to level off. A survey carried out in-house by the AA last summer had found that over the previous 12 months premiums had fallen by around 20 per cent.

"There has been a sustained period of falling prices and we expected that they will continue to come down next year. But what happens after that is unclear," said Mr Conor Faughnan of the AA.

The fall in premiums is attributed to a number of factors, including the introduction of penalty points as part of a national road safety strategy. Further road safety initiatives would probably be needed to bring about continued falls after 2005, according to Mr Faughnan.

A number of initiatives under the Government's Motor Insurance Action Plan are expected to feed into insurance costs next year. They include the Personal Injuries Assessment Board, which has been up and running since earlier this year and is predicted to cut the costs of settling claims.

The AA said the survey showed that the market is more price competitive.

"Although prices vary, the gap between the most expensive and the cheapest policies has narrowed," according to the AA.

The organisation added that there was considerable variation between products in terms of additional benefits such as no-claims bonus protection.

Premiums for a 34-year-old female ranged from €493 with AA's own insurance arm to €575 with AXA direct. In 2003, the AA would have quoted the same person €488 and AXA direct would have quoted €600.

AA was the cheapest in 2003, but the most expensive on that occasion was Quinn Direct which quoted €741. In 2004 Quinn quoted €525,

For a man of the same age the cheapest quote in the 2004 survey was €544 with AA and the most expensive was €715 from Quinn Direct. A year ago the same companies were quoting €560 and €851. They were the cheapest and the most expensive respectively on that occasion also.

The 2003 survey was based on a two-year-old VW Golf, in 2004, it was a one-year-old VW Golf.