The AA's British Insurance Premium Index has shown its biggest annual drop since its records started in the 1990s. The average Shoparound quote, which is the mean of the five cheapest quotes for each 'customer' in a nationwide 'basket of risks', fell by £568.32 and 12.4 per cent in the year ending 30 September 2013. Premiums increased by more than 40 per cent only two years ago, but have been rapidly reducing again over the last year. This, according to Simon Douglas, director of AA Insurance, is because the car insurance market has become intensely competitive: 'These drops are dramatic and many insurers are reducing rates based on anticipated savings from new measures in the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012,î said Douglas. 'The insurance industry is working hard with enforcement agencies to bring those attempting to make fraudulent injury claims to book. Indeed, there have been some recent widely-publicised arrests of criminal gangs deliberately causing crashes through 'crash for cash' and its new variation, 'flash for cash' scams in order to cash in on insurers by making false whiplash injury claims against innocent motorists. 'Honest motorists have been putting up with their premiums being affected by false or exaggerated injury claims for far too long. 'There has been a lot of talking and investigation into the car insurance market. Now premiums are reflecting anticipated law changes.î New Government legislation, which hopes to counter growing cases of whiplash fraud, is likely to see insurance premiums fall further. Justice Secretary, Chris Grayling, said: "We are turning the tide on the compensation culture and helping hardworking people by tackling high insurance premiums and other motoring costs. "It's not right that people who cheat the insurance system get away with it while forcing up the price for everyone else - so we are now going after whiplash fraudsters and will keep on driving premiums down." Douglas added: 'Without these further reforms to deal with excessive whiplash claims, the reductions we've seen can't justified by changes in the cost of claims. 'While competition may continue to force rates down for a while, without further reforms there would be a risk that there will be another sudden reversal once insurer losses start to bite. 'So these measures to contain the cost of claims are to be welcomed as ultimately that is what drives premiums.î From next year, insurers will also be able to ask for driver data directly from the DVLA, allowing them to stamp out false declarations of driving experience or convictions, which will create further savings on average policy costs.