Motor and other non-life insurance companies have been told to inform customers when personal injury settlements are made on their policies with third parties.
The Financial Regulator has also told insurers to pay settled claims within 10 days of agreement and to give customers the settlement terms in writing.
The regulator has written to all non-life insurance firms after carrying out a review, known as a themed inspection, of the sector early last year. This found that two-thirds of policyholders were not told by their insurer that a settlement had been reached on a claim against their policy with a third-party claimant.
However, since the review was carried out, the regulator's Consumer Protection Code has come into force, which requires that policyholders be told in writing of the final outcome of a claim against them. The review also found that one in six of agreed settlements took more than 10 business days to be paid.
The Consumers' Association of Ireland (CAI) said the review showed evidence of "unacceptable practices" in the insurance industry in the way firms dealt with customers' rights and money. "We welcome the fact that the regulator has highlighted this and believe that it is vital that it undertakes a similar review next year," said CAI chairman James Doorley.