John O'Neill tells Siobhán Creaton, Finance Correspondent, that thecompany is already cutting premiums based on good business practice, not on the basis of penalty points

John O'Neill loves to talk. He jokes that people who have gotten stuck sitting beside him on a flight have been known to try to get off when he gets into full flow. Bear in mind that he mostly talks about insurance, a topic that tends to either bore or incite rage, the latter being the most likely response in the current environment. It is easy to imagine why someone might start rummaging for a parachute.

The good-humoured chief executive of AXA Ireland, the subsidiary of a French-based international group that insures the 460,000 privately-owned cars in the Republic and most people's homes, knows he is not flavour of the month. He is part of an industry that has incurred the wrath of consumers, businesses and Government ministers for charging exorbitant premiums to provide insurance cover.

O'Neill proudly boasts that AXA Ireland made profits of €57 million in 2002 and expects to extract broadly the same amount of money from its customers again this year. In the same breath he is quick to advise that motor premiums have been falling and that there is plenty of scope for further reductions - but only if the Garda enforces the rules of the road.

His comments come as the number of road deaths rose to 35 in June. In the previous month another 38 people lost their lives on Irish roads. The statistics are terrible and are particularly disheartening given the 40 per cent reduction in the months immediately after the introduction of the penalty points system for motorists.

"In my view this is simply down to a lack of enforcement. We could initially see behaviour changes when penalty points were first introduced. But drivers have reverted to type because there was no physical enforcement."

He believes the Garda needs to be given greater resources to enforce road safety and to contain the carnage on the roads.

"Gardaí have a huge workload. This is a new job so we need to put new resources in to help them. They need the powers to do this. We have also heard about the ludicrous situation where three out of 20 cameras are ever operational at any one time. Your chance of getting caught is one in a thousand so why would you bother? I have a better chance of catching SARS than getting caught in a speed trap. That's the reason why the penalty points system appears to be not working."

Notwithstanding the recent rise in road deaths AXA reduced its premiums by 6 per cent this year and expects the cost of insurance could fall even further in the months ahead.

O'Neill says the group has the widest acceptance criteria of any Irish insurer.

The cheapest motor policy sold by the company this year was for €350 typically to insure a middle-aged woman, living outside Dublin driving a one-litre engine car. The most expensive premium was €11,000, which was quoted for a 30-year-old male with a drink-driving conviction. The highest quote it has ever given was for €26,000, which is the price it would charge a young inexperienced male driver with a Bentley or a Maserati. He didn't take it.

"Young females are better drivers than young males. I can only speak for the facts. Younger females do not have that bravado that young males tend to have and they are just different in their views on the way to drive a car. Overall I think that women are generally better drivers," he says.

This experience dictates that AXA, like most other insurers, tends to offer cheaper insurance deals for women and that young males will continue to have to pay through the nose for insurance.

"Young males between 18 and 21 tend to drive late at night with their friends. They are inexperienced drivers and sometimes there is drink or other substances involved. The result is horrendous accidents. They are generally single car accidents, which tends to suggest they were speeding."

Where there are severe injuries the cost of settling a claim can be huge. "We could end up paying about 4.5 million to a 17-year-old who sustained serious injuries in a car accident. This takes account of the fact that they would need care for the rest of their life and the loss of earnings."

This is the primary reason why young male drivers pay such punitive insurance premiums, according to Mr O'Neill.

The big problems are speeding, not wearing a seatbelt, drink-driving and young unaccompanied male drivers. The AXA chief says the insurers can play their part in increasing road safety awareness but gardaí are the only people who can enforce the law.

AXA is part of the Irish Insurance Federation that has publicly opposed an initiative proposed by the Minister for Transport, Mr Seamus Brennan, that would link the cost of insurance premiums to the penalty points system. The Minister said he would grant insurance companies access to the National Driver File, where traffic offences are recorded, in return for a 15 per cent drop in motor premiums.

So far only Hibernian has signed up for the scheme but has pledged a 10 per cent premium cut. O'Neill insists AXA is not for turning.

"We have been reducing our premiums over the past 12 months. Our policyholders are on average seeing a 6 per cent reduction in their premiums. We have looked at our rating structures and have been reducing premiums. We don't have to be promised anything to do this. It is good business. When the business starts to turn in a profit you have to make sure that you don't lose good business to competitors, so you have to control the price."

Despite the industry's rebuke he is full of praise for the dynamic Transport Minister but dismisses his quid pro quo for access to the National Driver File, as a "publicity-seeking" initiative.

"Under competition law it is impossible for insurance companies to come together to agree on pricing. We have already had a very serious warning from the Tánaiste about anti-competitive pricing," he says.

On a positive note he says that the cost of settling claims has tapered off, partly in anticipation of the introduction of the Personal Injuries Assessment Board. Insurers are seeing some claims being settled more swiftly and for a bit less, he says.

Tough measures to tackle fraudulent or exaggerated claims are also bearing fruit and will be shortly supported by new legislation.

The fact still remains that the cost of car insurance is still up to 35 per cent more expensive here than in the UK. O'Neill says there is plenty of scope for this differential to eventually fall to around 10 to 15 per cent.

"The only way to turn motor insurance into a profitable business is to stop accidents. People need to be aware of what they are doing and to know that the law will be enforced," he says.