Representatives of the insurance industry have told the Oireachtas Committee examining the rising cost of motor insurance that premium increases are primarily down to the "extreme volatility in the claims and compensation environment".
Chief Executive of Insurance Ireland Kevin Thompson also said rates are being driven up after a period of "under-pricing" and because of a fall-off in the performance of investment returns.
"We have been very clear on the main factors that we believe are leading to the current steep increases in premiums, which is the extreme volatility in the claims and compensation environment, and the associated legal costs, all of which have risen significantly," he said.
"Put simply, there are more motor insurance claims and they are costing more."
The Joint Committee on Finance, Public Expenditure and Reform is holding public hearings to examine the rising cost of motor insurance.
"We believe the key factor in halting this upward spiral in the cost of premiums is achieving consistency and reasonableness in the awards regime," Mr Thompson added.
The committee was told by representatives of the insurance industry that the cost of settling claims has risen by 24% on 2014 levels.
However, Fianna Fáil TD Michael McGrath said premiums have risen by 70%.
"How did you arrive at a point where premiums are up by 70% in three years if you are saying the main factor driving prices is claims paid out?", he asked.
Mr McGrath said the industry was attributing the increases to the rising claims but the rate of increase in premiums did not match the rate of increase in payouts
Chief Executive of the Irish Brokers Association Ciaran Phelan earlier said consumers need to realise that the new norm will see average premiums closer to 1990 levels and increases in premiums are necessary.
Mr Phelan said its members have to deal with the many "confused and angry motorists whose premiums have increased by over 70% in the last two years".
"In a functional market, it would have been more gradual and less discriminatory", he added.
The Competition and Consumer Protection Commission has meanwhile told the committee that they had engaged with Insurance Ireland in October last year over concerns about price signalling.
The commission this week launched an investigation into anti-competitive practices in the sector.
CCPC Commissioner Karen O'Leary said no immediate enforcement action was required at the time but that more recently, the industry had openly signalled up-coming increases in premiums.
"We have noted public statements made by insurance companies forecasting, with confidence, that premiums will rise, at times specifying the amount of the predicted rise and that these increases are inevitable."
She continued: "Statements signalling future pricing intentions may result in a degree of unspoken coordination which may breach competition law."
She said they had been very concerned by these statements and had now issued summonses and formal requests for information to players in the sector.
"The evidence collected will allow us establish the facts and take appropriate action."
Ms O'Leary also told the committee that in 2005, the then Competition Authority undertook a major study which identified a number of reasons why competition among insurance companies was not as strong as it could be.
She said that study recommended greater disclosure of risk-related data as a lack of data acts as a barrier to entry. New entrants would find it extremely difficult to assess the overall market risk without accurate data.
Call for Personal Injuries Board review
Paul Carty of the Irish Brokers Association has suggested the Personal Injuries Board needs to be reviewed.
He told the hearing that many assessments are rejected by clients which means they automatically go to the Courts.
He outlined one case study where a van "glanced off" a people carrier parked in a car park in rural Ireland. The driver of the van accepted liability.
The driver of the people carrier claimed €950 damage, for which she received €380 following an engineer's report.
However, a case was brought to court on behalf of the four children in the car and €84,000 was awarded to them based on the psychological affect to the children.
Mr Carty said it was an extreme example but it illustrated a point.