Whiplash injury claims cost insurers more than £2 billion last year - adding around £90 to the cost of a typical car insurance policy, the AA has revealed.
The motoring organisation said reform of the injury claim system "cannot come soon enough".
The comments came as ministers hosted a motor insurance summit in London, with the government expected to outline measures to "weed out" false claims.
The measures could include proposals to tackle "questionable" medical evidence and encourage insurance companies to challenge dubious claims.
The AA said that, over the past two years, claims for whiplash injury contributed to the biggest car insurance premium increases ever recorded.
In that time, the average shop-around quote for a comprehensive policy rose by nearly 50%, the AA added.
Simon Douglas, director of AA Insurance, said: "I hope that today's Government announcement will see a tight timescale applied to reform of the civil litigation which at present, encourages people to make a claim regardless of how serious their injury is or even if they have not suffered injury at all.
"Importantly, we need reforms that clamp down on cold-call claims management and personal injury firms who have contributed to the growth of claims."
He went on: "The present dysfunctional system has also spawned a fraudulent multi-million-pound 'cash for crash' industry."
Mr Douglas said he was disappointed in the slow rate of progress shown in the House of Commons Transport Committee's latest report on motor insurance, published in April.
He added: "But I acknowledge that a lot of momentum has built up. Reform can't come soon enough. It is wrong that injury claims are rising while the number of accidents on Britain's roads is falling."
Justice Secretary Kenneth Clarke said the Government's plans will aim to tackle questionable medical evidence and make it "quicker, cheaper and easier for valid injury claims to be dealt with through the small claims court".
Proposals, to be outlined in a consultation document this summer, will include consulting on the feasibility of introducing independent medical panels.
The independent medical experts, who would have no direct links to either claimants or defendants, would replace the current assessment of whiplash injuries by either GPs or doctors employed by medical reporting organisations.
Doctors can currently receive a fee of up to £195 to process these claims and some have a regular client base of solicitors.
Other proposals include raising the limit for personal injury cases in the small claims court from £1,000 to £5,000.
The Government will also "strongly encourage insurers to pass on the savings back to their customers", Mr Clarke said.
He added: "It is scandalous that we have a system where it is cheaper for insurers to settle a spurious whiplash claim out of court than defend it, creating rocketing insurance premiums for honest drivers.
"Our reforms will put a stop to this."
But Karl Tonks, president of the Association of Personal Injury Lawyers (Apil), said: "Whiplash injuries are real, they can be long term, and must not be trivialised.
"Before it announces a raft of propositions which risk barring genuinely injured people from bringing legitimate claims, the Government must have a wider debate about the real issues, and it must also hold the insurance industry to account.
"I'm really concerned that in all the latest populist rhetoric about whiplash claims, everyone is being tarred with the same brush."
He also warned that, in a bid by insurers to save costs, there was a "growing trend of insurers offering cash to claimants even before a report has been received from a doctor".
Prime Minister David Cameron has vowed to take on the "compensation culture", including the £2 billion-a-year costs associated with whiplash that are forcing up insurance costs for all motorists.
While the number of road accidents involving personal injuries reported to the police is falling, claims for compensation are increasing, figures show.
The number of motor vehicle accidents where personal injury was reported to the police fell by 23% from 199,000 in 2005, to 154,000 in 2010, Department for Transport (DfT) figures showed.
But the number of personal injury claims following road traffic accidents which were reported to the Department for Work and Pensions Compensation Recovery Unit rose by 70% from 466,000 in 2005-06 to 790,999 in 2010-11.
Transport Secretary Justine Greening said "huge" progress had been made in improving and reforming the motor insurance system.
She told ITV's Daybreak: "We have really started to take some of the costs out of the system particularly around whiplash claims. We have banned referral fees, we have reformed the no win, no fee system, and the next thing I now want to talk to the insurers industry about is how we can particularly help young drivers who have the sky high premiums."
Ms Greening said the range of changes made so far should take around £1bn out of the cost of whiplash claims every year.Suggest a correction