Allianz Ireland has followed FBD Insurance in announcing a 5 per cent reduction in its motor insurance premiums. The company said the reduced rate would apply from October 1st.

This is the second premium reduction announced by the company this year. In June, Allianz reduced its premiums by 5.5 per cent, bringing the total decline this year to 10.5 per cent.

Allianz chief executive Mr Brendan Murphy said yesterday that the company was trading profitably. "The cost of claims is still increasing in some sectors and, after the negative effect of recent turbulent years, we are now in the process of consolidating our position."

Mr Murphy stressed that it was important its operations deliver results that allow Allianz to maintain capacity in the Irish insurance market. "It is essential that we can continue to write complex lines of commercial and general business for our insured," he said.

On Wednesday, FBD Insurance cut its motor premiums by 5 per cent and other insurance rates by up to 10 per cent. At the beginning of August, Royal Sun & Alliance said it was cutting its premiums by 7.5 per cent and in June Axa announced a 6 per cent reduction.

Hibernian is the only company to have agreed to link cuts in premiums to the new penalty points system and will be given access to drivers' records by the Minister for Transport, Mr Brennan.

It has pledged to cut its premiums by up to 10 per cent for drivers who do not incur any penalty points by the end of this year.

FBD director of insurance Mr Martin Moran suggested this week that consumers had good grounds to be confident of further reductions in insurance premiums in the months and years ahead.

Much will depend on road fatalities and on reducing the cost of claims as well as stamping out fraudulent claims.