FBD Insurance has cut its motor insurance premiums by 5 per cent and other insurance rates by up to 10 per cent, it announced yesterday.

FBD said the cuts reflected the commitment it made earlier this year to pass on the benefits of an improved claims environment to customers.

The 5 per cent drop in premiums for all motor insurance policyholders at FBD follows a reduction of 5 per cent made earlier this year. In addition, the introduction of discounts for female drivers earlier this summer has delivered savings of up to 17 per cent, the insurer said.

Mr Philip Fitzsimons, chief executive of FBD Insurance, said there was no doubt that the climate for motor insurance had altered.

"We've seen a reduction in accident rates and the level of awards that arise from claims," he said. Judges were "taking a stronger view" on bogus claims, he added.

Underwriting losses on motor insurance at FBD fell by €12 million last year, from €22.3 million for 2001 to €10.2 million for 2002.

Home insurance and farm property rates at FBD have been reduced by 10 per cent, while shops, pubs and other retail outlets will see their property rates fall by an average of 7.5 per cent.

While employers' liability insurance remains at current levels, FBD has undertaken to cut premiums if positive claims trends continue.

"Liability insurance is still a problem but is showing some signs of improvement," said Mr Martin Moran, director of insurance at FBD. "If these improvements come through to the bottom line, we will ensure our customers see the benefits in reduced premiums."

Mr Moran added that customers have good grounds to be confident of further reductions in insurance premiums in the months and years ahead.

He warned, however, that all parties, and the Government in particular, needed to "keep their foot on the pedal, especially in relation to legislation currently in the pipeline".

Mr Fitzsimons pointed to the forecast that the Personal Injuries Assessment Board could knock 7.6 per cent off motor insurance premiums once it is established.

Road safety initiatives, including the introduction of the penalty points system, could result in a further 10 per cent reduction in premiums for customers, he said.

He said the insurance industry needed the support of this infrastructure and legislation to tackle the underlying problems in the insurance market.

FBD's move follows a 7.5 per cent reduction in premiums announced by Royal & Sun Alliance at the beginning of the month.

Axa also reported a 6 per cent drop in premiums over the year to the end of June.

However, Hibernian is the only company to confirm it will base premium cuts on drivers' records under the new penalty points system.

The State's largest motor insurer reiterated its commitment last month to cut premiums by 10 per cent for customers with no penalty points before the end of the year.

Mr Fitzsimons said he didn't know why more insurers had not undertaken to make premium cuts, despite the fall-off in motor insurance claims.

"We base our pricing on our own experience and we are in a position as an Irish-owned company to move quickly," added Mr Fitzsimons.