LONDON (Reuters) - British motor insurer Admiral Group (>> Admiral Group plc) said on Friday turnover fell in the third quarter by 3 percent from a year earlier in a competitive market.

Admiral competes with UK rivals including RSA (>> RSA Insurance Group plc), Direct Line (>> Direct Line Insurance Group PLC) and esure Group (>> Esure Group PLC) and increasingly popular price-comparison websites.

"We anticipate that future earnings will be impacted by the decline in premiums experienced across the market in recent years, coupled with a return to higher claims inflation," Chief Executive Henry Engelhardt said in a trading statement.

Group turnover fell to 513 million pounds, the firm said in the statement, while the company's UK car insurance turnover fell by 5 percent to 419 million pounds.

Group customers rose by 10 percent to 4.03 million, compared with the third quarter of 2013, and UK customers rose by 5 percent to 3.18 million.

Admiral also said it expected the performance of its UK price comparison site Confused.com to be weaker in the second half compared with the first half of 2014.

The FTSE 100 insurance group's other brands include Elephant, Diamond and Bell.

Admiral's shares fell 1.7 percent early on Friday. They are broadly flat this year, outperforming the FTSE 100 index <.FTSE> but underperforming most insurers.

Eamonn Flanagan, analyst at Shore Capital, reiterated his "sell" recommendation on the stock, citing a "deteriorating" claims environment for the sector.

(Reporting by Carolyn Cohn; Editing by Pamela Barbaglia and Pravin Char)