SMALL business car fleet managers have been warned that car insurance premiums are set to rise a staggering 10% this year.

BBC Business reported that according to the AA, premiums are bound to rise following the latest index of the cheapest deals on the market showing the cost of annual comprehensive car insurance had risen by 0.2% to £540 in the final three months of 2014.

Yet the total was still £200 cheaper than the peak in 2011 and this low level is unlikely to be maintained, the AA said.

“Car insurance is extremely competitive. Nevertheless the underlying trend is upward,” said Janet Connor, managing director of AA Insurance.

The AA Insurance Shoparound survey takes an average premium for a standard set of risks from the five cheapest quotes from insurers and price comparison websites.

This showed that the cheapest quoted comprehensive annual motor insurance rose in price in the second half of 2014 following three years of falls.