Insurance companies must undertake to report cases of suspected insurance fraud to the Garda if the "crisis" in the area is to be properly addressed, according to action group the Alliance for Insurance Reform.

Supermac managing director Mr Pat McDonagh, who chairs the group, claimed yesterday that officers from the Garda Bureau of Fraud Investigation had recently informed him that they had received no reports of insurance fraud from the Irish industry.

The Insurance Industry Federation (IIF), the umbrella group for Irish insurance companies, estimated on Monday that insurance fraud had cost €65 million in the Republic last year. The federation called for the introduction of a new offence of insurance fraud.

Mr McDonagh said the federation's estimate of the cost of fraud was much too conservative.

"We would estimate that it is much closer to half a billion than €65 million," he said, insisting that sufficient measures already existed to allow for the reporting of insurance fraud.

"At the moment, there is opportunity to report fraudulent claims to gardaí," Mr McDonagh said. "They haven't availed of the current legislation."

A spokesman for the IIF said last night that any suggestion the industry was not co-operating with Garda on fraud was "rubbish". He added that the federation had invited the Alliance for Insurance Reform to a meeting, but that the action group had as yet refused the opportunity to initiate discussions.

"The IIF would agree with all the objectives of the Alliance for Insurance Reform," he said.

Det Insp John McCann of the Garda Bureau of Fraud Investigation confirmed to The Irish Times yesterday that a number of insurance fraud prosecutions were continuing at the current time but was unable to pinpoint the exact source or nature of those proceedings.

"We would encourage people to report a case if they feel a fraud has been perpetrated," he added.