Insurance Ireland says it is "now up to the Government to decide when and how this will happen"
Insurance companies have agreed to fund a new Garda unit dedicated to investigating insurance fraud, at a cost of €1 million a year.
It is hoped the unit, which would be operationally independent of the insurance industry, would ultimately bring down the cost of premiums for motorists.
Insurance companies have frequently raised concerns over fraud, with the Motor Insurers' Bureau of Ireland last year suggesting as many as one-in-eight claims that it sees are "suspicious".
A report to the Government has previously proposed further cooperation between the insurance sector and An Garda Síochána when it comes to investigating potential insurance fraud.
CEO of Insurance Ireland Kevin Thompson says it's now up to the Government to get any new unit up and running.
He explained: "It was part of a recommendation within the Government's own 'cost of insurance' working group.
"We have responded to that recommendation through our analysis, and we have confirmed to the Government that the funding is there. It's now up to the Government to decide when and how this will happen."
The Alliance for Insurance Reform - a group looking to drive down insurance costs in Ireland - welcomed the proposal.
Peter Boland of the Alliance for Insurance Reform observed: "This is great news for anyone concerned about the scale and impact of fraudulent and exaggerated personal injury claims in Ireland.
"In particular, we note that the new fraud group will be funded by insurers but will be operationally independent of them. This is right and proper and will mean that there should be no barriers to the urgent establishment of the unit."