The culture of "ambulance-chasing" lawyers and bogus whiplash claims could come to an end following new measures set out by the Government to crack down on insurance fraud.
Lawyers will be banned from offering accident victims incentives such as money or free iPad computers to encourage them to make a claim and courts will be given powers to throw out compensation actions where claimants have been dishonest.
The reforms by the Ministry of Justice (MoJ) aim to tackle the rise of the compensation culture and reduce the amount being paid out unnecessarily by insurance companies - which can lead to higher premiums for honest customers.
The price of average motor insurance fell by more than £100 over the last year, according to the AA.
Despite this, 59,9000 dishonest claims - a rise of 34% - cost insurers £811 million in 2013, the Association of British Insurers (ABI) said.
Otto Thoresen, director general of the ABI, said: "These changes are a very positive development for the vast majority of honest insurance customers who end up paying for the fraud of the minority.
"We applaud the decision to ban the distasteful advertising which offers cash or other inducements for personal injury claims. This only serves to reinforce to unscrupulous claimants that there is a compensation culture to exploit."
The Government's measures will tackle bogus motor claims and also others such as "trips and slips" at work and in public places, the MoJ said.
Powers enabling courts to refuse dishonest compensation claims will stop people from exploiting the system by grossly exaggerating their injuries.
Improved medical assessments will also help reduce questionable whiplash claims, with assessments carried out be independent professionals setting fixed fees.
New rules will also stop claims being settled without confirmation of a claimant's injuries.
The MoJ also welcomed assurances from the insurance industry that savings through the new regulations would be passed on to customers.
Justice Secretary Chris Grayling said: "We are making sure we do our bit to help drivers with the cost of running a car, and putting money back in their pockets.
"Insurance premiums have fallen by record amounts over the past year as we have turned the tide on the compensation culture but there is more to do. We are continuing to go after the fraudsters who force up costs for honest drivers."
Roads Minister Robert Goodwill added: "The costs of owning and running a car are felt by millions of households and businesses across the country and this Government is determined to help keep those costs down. Insurance premiums have fallen but we are keen to do more with the industry to drive down costs further."
Paul Evans, AXA UK chief executive, said: "In recent years, we have seen a growing trend of exaggerated whiplash claims and consumers have not appreciated the significant impact this has had on their own premiums and the premiums of their families and friends.
"Motor premiums are still far higher than they need to be, driven by a high number of exaggerated or fraudulent claims, many of which are for whiplash. There is no doubt that people have been encouraged and motivated to do this by claims management companies.
"Consumers need to understand that under these new proposals from the Government, anyone found to be dishonest when making a claim will run the risk of having their entire case thrown out of court and losing every penny of potential compensation, even if part of the claim is legitimate.
"These new measures, including steps to clamp down on companies incentivising individuals to make insurance claims, are a major step in curbing the 'compensation culture' which has inflated premiums for UK consumers for too long.
"Our own research tells us that one in five people have been approached by a claims management company in the last 24 hours and a further quarter of the population have been approached in the last week.
"These companies lie at the root of the compensation culture problem and, whilst there is still much further to go in tackling high premiums, we warmly welcome these developments."