When he has time away from the office, Brendan Murphy likes to get involved with kids and sport. It's easy to see why.

The chief executive of the Irish operation of global insurance giant Allianz is a man of enthusiasm - whether it's explaining the importance of insurance to the Irish economy and the challenges the industry faces or recounting the exploits of his son Simon, who last year led his school, Gonzaga College, to within seven points of winning the rugby Leinster Junior Cup.

Allianz has stayed out of the front line of the debate over insurance reform - largely because motor insurance is not its dominant business. Although it is the third-largest player in the Irish motor market, Allianz's focus lies in commercial business, both property and liability.

Allianz first entered the Irish market in 1998, when it acquired two-thirds of AGF Irish Life, the holding company for Church & General and the Insurance Corporation of Ireland.

The German group had earlier that year bought a majority stake in AGF's parent, the French multinational insurer Assurances Générales de France. While the parent company covers a range of areas, the Irish operation concentrates on non-life business.

Mr Murphy started life as a chartered accountant following a commerce degree at UCD.

He worked initially with Deloitte Haskins, which later became part of Deloitte Touche. It was there that he first encountered the insurance industry. After working with a number of clients in the sector, he spent time with a London-based insurance industry group at Deloitte.

He was headhunted by AIB to set up an internal audit function at its Insurance Corporation of Ireland subsidiary. The timing was awful.

"I joined ICI in December 1984, about three weeks before it entered administration," he recalls.

However, the crisis also offered solutions to the ambitious young accountant.

"I had some experience of insolvency work and, as a result, I stayed with the group after it entered administration.

"At times like that, a lot of barriers disappear," he explains.

When the dust died down, the accountant working in insurance had become an insurance man with an accountancy background.

When Allianz came to Ireland, it approached him. Joining as an operations executive he moved steadily up to the chief executive's chair, which he assumed last year.

"I would say they were looking for a professional manager and a person capable of leading because there was no shortage of professional expertise here when I arrived," he says.

Allianz Ireland employs more than 900 people and is the second-largest player in the Irish insurance market, north and south.

Mr Murphy says the importance of the commercial insurance sector is an issue that has been missed in the current debate, shunted out of the way by the overwhelming focus on motor insurance.

"Motor insurance is a grudge purchase. No-one wants to buy it. It's a commodity product and people will move their business for the sake of five or 10 euro," says Mr Murphy. "Commercial insurance is much more important in the context of the Irish economy."

He likens commercial insurance to a pre-funded line of credit with insurers agreeing to pay out claims that might be totally unforeseen, as was the case with the asbestos issue that emerged decades after the insurance was first bought.

"Security and scale are important in this business because things can emerge that no-one could anticipate when you write the business and you have to be in a position to meet those claims," he says.

That means allowing companies to earn a decent return on capital, something that has not happened in recent times, he suggests.

"Our return on capital for the five years ending in December 2002 is 0.5 per cent compared to the four quoted Irish banks which had a return of 20.6 per cent in the same period."

The debate over commercial insurance has been dominated by the rapid rise in the cost of liability cover. Mr Murphy acknowledges costs have risen but insists it is only because of a return to sanity by the market.

"In the mid-1990s, investment returns were effectively subsidising the cost of cover," he says. "Allianz was ahead of the posse in acting to bring premiums back into line with underwriting costs. Our parent group's approach was that we were insurers, not investment managers, and the premium should reflect the cost of the business."

The rapid rise in the cost of injury claims was another challenge and inconsistency in those awards continues to be one of the biggest bugbears for the industry, according to Mr Murphy.

The arrival of niche players in the market, cherry-picking business and driving down prices, also played a role in the unrealistic level of premiums, he says.

"One of the problems we have is that there are 420 firms authorised to write business here," Mr Murphy says, laughing at the notion of a lack of competition in the market.

"What these firms have tended to do is adopt predatory pricing. They pick one or two risks and lower the price in a bid to get business."

He cites the failed Independent Insurance as a case in point.

"We saw that coming because we could see the quotes people were getting from them and they were, in some cases, less than half the price we were quoting, and you just can't do that."

Its collapse left a number of companies shouldering significant burdens - enough in at least one case to lead to closure with the loss of 90 jobs.

This transient capital has become a major issue for the larger operators. "These companies come and go, and up to 40 per cent of the commercial property market and about 20 per cent of the liability market can be served in this way.

"The problem is that the companies that stay here and have continued to support the market are the ones that get hauled up and beaten up while the transient capital disappears as soon as times get hard."

That leaves people facing major increases in premiums as they return to practical levels and a residual grievance against the industry.

Mr Murphy insists this is an issue the Oireachtas Joint Committee on Enterprise and Small Business, which is examining insurance reform, needs to consider. "We're saying the committee should address this because it has a huge destabilising effect on the market."

Rising premiums have seen the rise of self-insurance and, while Mr Murphy believes it might be appropriate for certain companies and certain risks, he warns that it does require a certain expertise.

Certainly, he says the trend towards businesses taking a greater proportion of risk upon themselves has seen more attention to what is going on, such as the notorious video produced last year showing youths trying to injure themselves in the toilet of a restaurant.

He is sceptical about so-called new approaches, seeing insurance instead as a traditional industry based on pricing risk. "At the end of the day, it is a financial decision - like hedging any other cost that arises in a business."

Mr Murphy feels the industry has been more than prepared to address the challenges it faces and the need for reform but it's not something he expects it will get credit for.

"We carry our cross with a smile," he says. "We are on the bottom rung of the ladder in terms of a PR view of life as far as the public is concerned and I don't think we are going to get out of there in the short term."