Whiplash claims are costing motorists a total of £2.5bn a year and this is adding £93 to the average motor premium.
Insurer Aviva said this was due to the "UK compensation culture" with claims for personal injury increasing by 62% despite a 30% reduction in road traffic accidents.
In its report Road to reform: Driving out compensation culture, Aviva said the £2.5bn was based on the number and value of whiplash claims. According to the Association of British Insurers the average motor premium was £372 in the last quarter of 2014.
Aviva reported that 96% of the personal injury claims it received last year were brought by third parties such as claims management companies and personal injury lawyers.
Maurice Tulloch, CEO, UK & Ireland general insurance at Aviva, said: "The UK's compensation culture is at the root cause of the £93 cost of whiplash claims paid by motorists within their insurance premiums. Our customers have told us they are fed up with compensation culture and all its trimmings: the nuisance texts and calls from claims management companies, excessive lawyers' fees and fraudsters abusing the system for their own financial gain. It doesn't have to be like this."
The report said that between 2005 and 2013 UK motor premium rates rose faster than in other European countries. The majority (80%) of the motor injury claims the firm received were whiplash, compared with 3% in France and 47% in Germany.
In order to reduce the number and cost of whiplash claims Aviva outlined a range of proposals.
These included that all whiplash or soft tissue injury claims should be made within 12 months of the accident instead of the usual three-year limitation period.
The company suggested limiting the time and threshold of the claimant's symptoms, saying it should last longer than three months and be accompanied by medical records.
Aviva said insurers should provide treatment of up to three months to their policyholders or the injured party, "regardless of who is at fault for the accident".
Other recommendations included independent medical evidence from MedCo between three and 12 months after an accident and an assessment of the level of disability.
Tulloch said: "We believe that everyone is entitled to fairly priced insurance to protect what is important to them. Introducing these reforms is a challenge but we will not hide away from this - the UK's motorists deserve even more affordable motor insurance."