The Minister for Transport, Mr Brennan, is demanding that insurance companies provide a reduction of up to 15 per cent in motor insurance premiums for drivers who do not collect penalty points.
The savings proposed by the Government would work out at €150 for a policy-holder whose premium costs €1,000.
The Irish Times has learned that Mr Brennan has given insurance firms a four-week ultimatum to guarantee the bonus for law-abiding motorists. However, they have so far refused to agree to the figures.
The Minister has said he will not provide insurance companies with access to a penalty points database if they do not agree to his terms.
The Irish Insurance Federation last night said it was in favour of the principle of rewarding drivers with clean records, but insisted it was up to individual firms to negotiate a reduction with the Government.
The IIF's spokesman, Mr Martin Long, said it would be unfair of the Minister to restrict access to the database, as the information could be used by all companies to identify drivers who are breaking the law.
It is understood that offers from major insurance companies so far have fallen well short of Mr Brennan's 15 per cent target and centre largely on redistributing cost-savings in general, without specifying a reward for individual premium- holders.
The dispute comes as the Minister is today expected to announce that around 100 lives have been saved as a result of changes in drivers' behaviour on the roads since the introduction of penalty points last year. Department of Transport officials estimate that the reduction in accidents has saved insurance firms up to €130 million.
The Minister told The Irish Times yesterday: "Insurance companies aren't playing ball at the moment. They need to show more vision and should be making an investment in saving lives."