Direct Line Insurance Group has reported a bigger than expected rise in motor insurance prices for the third quarter, helping to boost its sales.

The insurer, which controls brands such as Churchill, Green Flag and Privilege, reported an 8.4 per cent rise in risk-adjusted motor prices.

It also said it had cut costs by seven per cent in the first nine months of the year.

Strong competition in British motor insurance has put pressure on prices in the past few years, partly because of the growth of price-comparison websites. But in the past few quarters prices have been increasing.

A benchmark survey by roadside assistance firm AA showed a 4.8 per cent increase in the third quarter in the Shoparound quote - an average of the five cheapest quotes returned from price comparison sites as well as direct insurers and brokers.

Direct Line said gross written premiums rose 3.1 per cent to £844.5 million in the third quarter, with a 6.8 per cent rise in gross written motor premiums.

"This is a good headline increase, and management indicate this is where they need to be to pricing to meet their target loss ratio," Morgan Stanley said in a note to clients.

Direct Line, which competes with Admiral Group, RSA Insurance and Aviva, also said it had benefited from the absence of claims due to major weather events and was on track to achieve its 2015 targets.

On the new European capital rules for insurers that come in in January 2016, Direct Line said it would use a standard model to measure its solvency levels, but would apply to Britain's regulator to use a so-called "internal model," designed to cut capital costs, from mid-2016.