The Personal Injuries Assessment Board (PIAB) will start work on a statutory basis by the beginning of next year, according to the Tanaiste.
The board, already operating on an interim basis, will be formally established by new legislation that will go before the Oireachtas in the next session.
Ms Mary Harney said it had become increasingly clear in recently that the insurance market in Ireland was not functioning smoothly and that strict regulation of claims was required. The PIAB is a response to that need, she said.
Ms Harney was speaking at the Insurance Institute of Ireland's Annual National Conference in Wicklow this morning.
"I want to see an [insurance] industry that is strong and profitable but I also want to see an industry that supplies insurance products to the market at an affordable price that is competitive relative to other European countries," she said.
Reforms, she added, would encourage more companies to enter the Irish insurance market, offering consumers a wider choice and more competitive prices.
"I intend to meet a number of players in the insurance market in both Europe and America during the coming months and making sure that they are aware of the reforms that aking place and the impact which they will have on the profitability of the sector," she said.
I want to see premiums coming down to more realistic levels and I am glad to see the progress that has been made on this front."