Allianz, the third-largest insurer in the Irish motor market, will cut premiums for the third time in a year at the start of 2004.

The Irish subsidiary of the German insurance giant will cut rates by 7.5 per cent on January 1st.

The move follows a cut of 5 per cent last month and 5.5 per cent at the start of June.

The latest move means rates at Allianz will be almost 17 per cent lower in 2004, than at the start of this year.

The news comes on the day Allianz again appears before the Oireachtas Joint Committee on Enterprise and Small Business on the issue of Irish insurance reform.

Allianz Ireland chief executive. Mr Brendan Murphy, said the cuts his company had made showed it was delivering on insurance reform.

"What we do is reflect the underlying claims cost," he said.

"We have seen an improvement in claims costs and we are reflecting that in the premium.

"The cuts we have made are substantial and they have been delivered, not talked about," he added.

Rival insurer AXA, which appears before the committee tomorrow, will tell members that it has cut rates by an average of 15.4 per cent in the year to date.

Premiums fell by an average of 6 per cent earlier in the year and have fallen by a further 10 per cent on average in October.

That compares with a 10 per cent high profile cut implemented by Hibernian Insurance for drivers without penalty points who are renewing policies from November.

Hibernian balanced that cut with penalties for drivers accumulating six or more points.

AXA, which with Hibernian is the largest player in the Irish motor insurance business, has, like Allianz, refused to make specific pronouncements on cuts relating to penalty points.

However, it informed customers this week that it would take a pragmatic approach on the issue of penalty points, but warned that people accumulating points must notify the company at the time they pay the associated fine.

Otherwise, they might find themselves in trouble if they make any future claim. Most other insurers require notification of material changes relating to insurance at the time of policy renewal.

A newsletter sent to customers this week by AXA acknowledged that it was "inevitable with the welcome greater enforcement" of road safety that even good drivers were likely to receive points.

"We will give you two assurances," AXA continued. "Good drivers with a proven track record will not usually be penalised" for receiving up to six penalty points.

"Bad drivers, who consistently flout the law, bring a greater level of risk to the \ pool and will incur higher costs," the newsletter continues.

Allianz Ireland's Mr Murphy said the penalty point system had improved driver behaviour but expressed concern about whether that progress would continue in the future.

"Without enforcement, the improvement in driver behaviour seen in the past year will not be sustainable," Mr Murphy said.

"Implementation [of the MIAB report recommendations\] is the key to cutting the cost of insurance," he added.

"We would say as an industry that we have delivered and we would be disappointed with lack of delivery elsewhere."

FBD Holdings and Quinn Direct are also due to appear before the Oireachtas committee today and tomorrow, along with the Irish Insurance Federation.