The Government has approved the drafting of a bill which would set up a National Claims Information Database for the motor insurance industry.
The Central Bank (National Claims Information Database) Bill is one recommendation from a report of the Cost of Insurance Working Group, which was chaired by Minister of State Michael D'Arcy.
The database would facilitate more in-depth annual analysis of motor insurance claim trends.
This was seen as key to developing an understanding of how claims costs are impacting premiums.
It would also look at the relationship between the price paid by a customer for motor insurance, and the cost to insurance undertakings.
A data subgroup, chaired by the Department of Finance, was set up to oversee the development of the database and the underpinning legislation.
Its membership includes representatives from the Central Bank, the State Claims Agency, Personal Injury Assessment Board (PIAB), the Central Statistics Office and the Society of Actuaries.
The Central Bank has also begun work on developing technical specifications of the database and is consulting with industry on this.
The database is due to be established in 2018, but this will be subject to the Oireachtas agreeing on relevant legislation.
It is hoped allowing the Central Bank to collect the data will lead to a fall in the cost of cover.
Welcoming the decision approving the draft bill, Finance Minister Paschal Donohoe said: "This represents an important milestone in the implementation of one of the key recommendations of the Cost of Insurance Working Group's Report on the Cost of Motor Insurance.
"It is essential that there is an improvement in transparency around what has caused motor insurance premiums to be so volatile both up and down over relatively short periods of time.
"I look forward to having the National Claims Information Database put in place."
A public consultation on the draft bill will follow in January.