Shares in Britain's best known car insurers were boosted today as it emerged premiums have risen 8.1% in the third quarter this year compared to the same period last year - after three years of declining rates.
This sort of news is welcomed by the motor insurance industry but is unlikely to go down so well with drivers - though there was a ray of light for younger motorists.
Premiums are the amount paid by drivers on a monthly or annual basis to ensure they remain insured.
In a note, City broker Peel Hunt said the data from the Confused Towers Watson Motor index published today was "positive" for the sector and would start to earn through into the insurance industry’s earnings in the second half of 2016 and fully in 2017.
Analyst Andreas van Embden said the report showed "further signs" that UK rates continued to rise, reflecting a gradual "turn" in the UK Motor cycle.
Rates in the three months to end September were 4.8% higher than in the second quarter this year.
He noted that premiums were now £47 more than they were this time last year, making the average premium £629 for the third quarter of the year.
The index mainly reflects new business transacted through price comparison websites (PCWs), which now accounts for around 20%-30% of premium income at the PCW focused insurers.
The broker also noted that, in a break with tradition, older drivers seemed to be bearing the brunt of the rate increases with younger drivers up only 3.5 to 4%.
Van Embden also noted that as the increase will take time to filter through to company earnings, short term earnings pressure will continue in this year and the first half of 2016 as soft rates from 2014/15 continue weigh.
"Meanwhile, reserve releases will continue to support profits and dividends. Assuming rate increases start to exceed claims inflation this will lead to accelerating earnings momentum in 2016H2 & 2017, in our view," he said.
Aviva (LON:AV.) shares nudged 1.35% up to 482p, Admiral (LON:ADM) gained 3.43% to 1,582p and Direct Line (LON:DLG) added 0.61% to 379.10p.