Minister D'Arcy has dismissed the prospect of a dedicated unit being funded by private industry
The minister with responsibility for insurance is to meet with the Garda Commissioner to talk about setting up an insurance fraud unit.
It was recommended almost two years ago as a way of bringing down the cost of insurance premiums.
Two-thirds of people who were told by gardaí that their insurance claim was under investigation for being potentially fraudulent ended up withdrawing it.
Insurance Ireland flagged a number of cases with gardaí and - once officers called around to the claimants door to let them know - the majority of claims were dropped.
Minister of State Michael D'Arcy suggests this kind of co-operation with gardaí is what's needed.
He is behind the idea of a dedicated insurance fraud unit within the gardaí, but does not think it should be funded by the industry.
Insurance companies have previously stated they'd fund such a dedicated unit, at a cost of €1 million a year.
Minister D'Arcy said: "I don't believe it's appropriate that private industry funds any portion of An Garda Síochana.
"It would be a precedent... it hasn't happened before. But it's a matter I'm satisfied we can get around."
He added that investigations into claims shouldn't be figured out in the courts, and efforts should be made to deal with them earlier.
Justice Nicholas Kearns, who is the Chairman of the Personal Injuries Commission, says a dedicated policing unit works well in the UK.
The Insurance Fraud Enforcement Department (IFED) is funded by insurers.
Mr Kearns observed: "There have been no suggestions the IFED in the UK have operated in anything other than a fully professional and fully independent manner."
The Minister is to meet with Garda Commissioner Drew Harris next month to discuss setting up the unit.
Reporting by Kacey O'Riordan and Stephen McNeice