The upsurge in motor accidents and claims recorded in the first two months of this year could, if sustained, jeopardise future cuts in insurance premiums, the State's largest motor insurance player has warned.

Axa Ireland, which reported its highest-ever annual profit of €118 million this week, has reduced its average motor insurance premium by about 15 per cent over the past year.

The company's executive director for business operations, Mr Aidan Cassells, has indicated, however, that Axa has been watching closely the incidence of accidents and related claims so far this year.

"We're a little bit concerned about the deterioration in accident frequency," he said.

While keen to emphasise that Axa will not be overreacting to a short-term trend, Mr Cassells said it was important to ensure that earlier progress in reducing accident frequency would not be wiped out by a return to old driving habits. "The potential for future reductions becomes much more challenging if claim numbers start to move back upwards," he said.

Mr Cassells acknowledged that the introduction of penalty points at the end of 2002 had played a "dramatic" role in reducing accidents and claims for a short period, but said recent trends had been less encouraging.

"The second half of 2003 was the beginning of a negative trend and the deaths in the past quarter were materially higher."

Axa sees it as crucial for all involved in motoring, including the Garda and the public, to ensure that progress made is not wasted.

Mr Cassells said it was particularly important that the security requirements of the Irish EU presidency did not eat into Garda resources elsewhere.

"We need all the people involved to redouble their efforts," he said, adding that Axa would wait until April or May before taking a firm position on market flows.