The chief executive at Admiral, one of the largest car insurance firms in the UK, has warned that the cost of car insurance is likely to rise further this year due to increasing personal injury claims.

Henry Engelhardt, the head of Admiral, reported that his company had to increase motor insurance premiums by 12 per cent over the past 12 months to "compensate for claims inflation."

He added: "Prices have been going up across the market because of personal injury claims and comparison sites encouraging people to look for cheaper insurance. We think this trend will continue throughout 2010."

Admiral, which also owns the Confused and Elephant insurance brands and is a FTSE-100 company, reported pre-tax profits of £215.8 million for 2009, a 7 per cent increase on the previous year, with over 9 per cent of this coming from its UK motor insurance business.

The Royal Bank of Scotland, however, reported a £170 million loss during the same period for its insurance brands Churchill, Direct Line and Green Flag.

A spokesman for the Association of British Insurers commented: "Legal costs involved in settling motor personal injury claims need to be reduced, as they currently add an extra 10pc to motor premiums. These, together with the costs of uninsured driving and insurance fraud, continue to put an upward pressure on motor premiums."

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