Home insurance premiums continue to fall despite industry concern that claims costs will soon exceed premium income, according to the AA’s latest British Insurance Premium Index.

The index shows that the average ‘Shoparound’ quoted premiums for buildings, contents and combined policies all fell during Q3, continuing a fairly steady downward trend that began at the end of 2012.

The Shoparound calculation is an average of the five cheapest premiums from price comparison sites, direct insurers and brokers for each ‘customer’ in a nationwide basket of risks.

The Index shows that the average quote for buildings policies fell by 1.4% to £107.39 (down 3.1% over the year), for contents policies they fell by 2.1% to £60.00 (down 5.6% over the year) and for combined buildings and contents policies they fell by 2.4% to £149.30 (down 6.3% over the year)

Janet Connor, managing director at AA Insurance, said that while this continues to be welcome news for customers, premiums are now artificially low. “The past couple of years have seen very few serious weather claims – mild winters and little serious flooding or property-damaging storms. But that doesn’t mean there isn’t the potential to inflict serious damage to UK property.”