The State's largest motor insurer is increasing motor insurance premiums by an average of 5 per cent this year. AXA Ireland has about 30 per cent of the Irish motor market.
AXA owns the former Guardian-PMPA which has been rebranded as AXA, although the PMPA brand is being retained.
Managing director Mr John O'Neill said that while overall inflation is running at an annualised rate of 5 per cent, the underlying cost of settling insurance claims, including medical costs, is much higher at about 11 per cent.
Stating that his company is increasing premiums at renewal by an average of 5 per cent, he said in the market in general increases of 7 per cent to 11 per cent would be needed to achieve "a sustainable level of profitability".
AXA was able to hold its increase to 5 per cent because it had been raising premiums steadily in recent years as claims cost inflation rose and because it had the advantage of economies of scale, he said.
The cost of motor insurance reflects bad claims experience, according to Mr O'Neill. For every £100 of premium AXA takes in, it pays out £92 or £93 in claims, with the balance going to cover operating costs, he said.
Stressing the need for greater focus on road safety, he called for the introduction of a penalty points system similar to that in the UK to deter speeding and more rigorous implementation of seat belt rules.
He said legislative changes were needed to deal with the issue of provisional driving licences. Announcing the rebranding of the French group's Irish general insurance operations under the AXA brand, Mr O'Neill said that the company was the largest personal lines operation with 43 branches and direct and broker sales operations.
With AXA as a parent the business will have the financial resources for growth and investment and will focus on organic expansion of its core motor and home insurance business as well as commercial motor business both in the Republic and in Northern Ireland.
"Our ambition is to grow significantly over the next three to four years - with double digit annualised growth rates", he said.
In addition to organic growth in its core operations AXA plans to develop a broader range of financial services which it can sell to its direct base of 350,000 customers. The group is considering offering car loans and personal loans which it may develop in partnership with AIB.
Under the rebranding announced yesterday Guardian Direct becomes AXA Direct, the broker distribution division Guardian Insurance become AXA Broker, while PMPA will remain PMPA with the addition "a member of the global AXA group".
