Direct Line Group reported a 4% fall in its average car insurance prices while the number of in-force car policies declined 1.2% to 3.7 million as it moved to protect margins by refusing to chase market rates lower.
Car insurance premiums have fallen sharply recently, with the average price dipping more than £100 over the last year, according to motoring body the AA, as the industry cracks down on bogus claims such as whiplash injury.
Direct Line added that claims from storms and flooding came in at £60 million in the first quarter, lower that its previous guidance of £70 million to £90 million.
The company, which is one of the country's largest car insurers, said overall gross premiums fell 5.6% to £949.3 million in the three months to March 31, in part reflecting competition in the motor and home insurance markets.
The total number of policies written by the company fell from 19.4 million to 18.1 million over the same period a year earlier, although the company has benefited from improved claims trends in motor insurance.
The company said: "The UK motor and home markets are highly competitive. The group will continue to prioritise targeting appropriate margins, even if this is at the expense of policy volumes."