Car insurance premiums will rise, warns insurer

The company, which owns insurance brands Diamond, Elephant and Confused.com, predicted premiums will rise a few percentage points over the next few months.

Admiral reported a 16 per cent rise in profit before tax to £100.3 million for the first half of 2008, while turnover rose 13 per cent to £472.5 million.

David Stevens, chief operating officer, said: "Rises in market premiums and a relatively benign claims experience over the last 18 months mean that, for the first time in seven years, we see a real prospect of falling underlying loss ratios in our core UK business."

The motor insurance industry is highly competitive and premiums have remained virtually flat over the last few years, despite a rise in the cost of claims.

But insurers have been saying that this is unsustainable, and are starting to raise their premiums.