The Irish Insurance Federation (IIF) has branded the Motor Insurance Advisory Board's (MIAB) report to government as inhumane.

Draft comments on the report seen by Insurance Ireland said: "The MIAB did not examine safety issues in detail. It shows a hard financial, rather than humane, approach to road safety."

The draft added: "Safety is too important to be considered in a purely financial sense."

A spokesman for the IIF refused to comment on the specifics of the IIF's input into the report.

The MIAB passed its report to Tanaiste Mary Harney earlier this month. The report is the result of a three-year investigation into the insurance industry, prompted by complaints over premiums charged by insurers. Some young drivers are paying up to €2,000 (£1,221) per year for their motor insurance.

The report calls for the government to set up a watchdog to make sure motor insurers provide a fair deal for motorists.

The report also criticised lawyers and barristers for taking a huge slice of claims' costs. It said that 42% of the money paid out for accidents ended up in the pockets of lawyers and that legal fees for accident claims had shot up 43% over the past six years.

It added that lump sum settlements should be abandoned in favour of structured settlements, which provided an annual payment and a new fast-track arbitration system as an alternative to expensive court proceedings.

The arbitration system has been proposed for the Personal Injury Assessment Board which is currently being set up to reduce compensation claims. However, senior industry figures are sceptical about whether such a system would work.

MIAB chairman Dorothea Dowling said insurers had failed to become lean and efficient, and that drivers were paying the cost. She added that the number of accidents was falling but that premiums had risen 57% over the past ten years.

The IIF said that claims costs make up 85% of motor insurers' expenditure and that claims costs would have to come down before premiums could be lowered.

John O'Neil, chief executive of AXA, Ireland's largest motor insurer, said that motor insurance was not a profitable business for insurers. "The business is endemically unprofitable," he said. "There must be meaningful improvements in the next three years or AXA could decide to pull the plug."

Department of Enterprise, Trade and Employment minister Noel Tracey said that imposing price controls on the industry was out of the question.