Insurance costs should be reduced by 31 per cent if a series of measures announced yesterday are implemented, according to the Tánaiste.
Ms Harney announced the setting up of an interim Personal Injuries Assessment Board (PIAB), chaired by Ms Dorothea Dowling, former chair of the Motor Insurance Advisory Board (MIAB).
The interim board's first tasks will be to prepare legislation and work on a database, drawn from court awards, to link injuries and levels of award.
Ms Harney also announced the setting up of a Cabinet sub-committee, chaired by herself, to oversee the implementation of measures aimed at cutting insurance costs.
These are in the MIAB Action Plan, published yesterday.
The committee will include the Ministers for Justice, Equality and Law Reform and for Transport, their officials and officals from the Attorney General's office.
Further measures are expected to be announced shortly, also aimed at reducing insurance costs, Ms Harney said. These will relate to road safety issues and to the reform of court rules, aimed at cutting out unnecessary and costly delays.
The interim board of the PIAB will have as its primary focus "developing a pragmatic and workable system for handling insurance claims to the benefit of the claimant and policy-holders in general," according to the Tánaiste.
She stressed that it was not about reducing levels of compensation, but reducing the cost of delivering it. Ms Harney also pointed out that her Department and the Competition Authority were carrying out a study of the insurance market, in order to identify why there were not more foreign insurers in it.
The MIAB Action Plan contains 67 recommendations, and identifies both the expected savings from each and the stakeholder responsible for its delivery.
Referring to the 31 per cent reduction in costs identified in the action plan, the Tánaiste said: "There is an obligation on the insurance industry to ensure that this translates into significant reductions in premiums to customers."
However, Mr Martin Long, spokesman for the Irish Insurance Federation, while welcoming the proposals, stressed the tentative nature of the figure for reduced costs, which came from the IIF itself. He pointed to the statement from the chairman of the MIAB Implementation Group, Mr John Corcoran, who said: "I should emphasise the tentative nature of the IIF estimate and that cost reductions will be achieved over a number of years in an inter-dependent manner."
The chairman of the Bar Council, Mr Conor Maguire SC, said the proposals, particularly those relating to the PIAB, were "badly thought-out, not properly costed, and will be a shambles.
"It has been proven that the PIAB is not justifiable on economic grounds, and they are only now suggesting a cost-benefit analysis," he told The Irish Times.
"This may be a political answer to IBEC and the insurance lobby, but it is not an economic or just solution to the problem of high insurance premiums."
Mr Ken Murphy, director general of the Law Society, said he was "pleasantly surprised" at how many of the issues still remained open now that the proposals were published.
"The Tánaiste acknowledges that a cost-benefit analysis, as we have argued, has yet to be done. Dorothea Dowling has aknowledged that there were natural justice issues that remain to be answered in relation to victims' rights and to fair procedures and the recovery of legal fees."
However, he said he was "unpleasantly surprised" to discover that the Tánaiste had decided to proceed without any guarantee from the insurance industry that premiums would fall or that it would pass on any savings.