Plans have been outlined for gardaí to get a mobile phone app to let them check a driver's details at the roadside.
The database would include the names and details of insured and uninsured motorists, their driving licence and insurance policy number.
The first phase of the directory, holding information on privately owned vehicles and their owners, is expected to be ready in the second half of this year.
But there is no timeline for when the Garda Traffic Corps or other officers will get the technology.
Junior minister Eoghan Murphy said: "The ultimate aim is to provide An Garda Siochana with a mobile app, on an 'authorised user' basis, to allow for roadside access to the database."
Fleet-owned vehicles are expected to be included in the database by the second half of 2018.
Mr Murphy said technology could one day allow for gardaí to have automatic number plate recognition technology on their jacket which processes vehicle and owner details as officers walk down a street.
Gardaí already have the technology in some patrol cars but a database of vehicles, drivers, insurance and ownership is incomplete.
The minister revealed the ideas at the Oireachtas Finance Committee as part of his department's report on the cost of motor insurance after premiums soared by more than 50% over the last five years.
Mr Murphy defended a proposal for a "specialised and dedicated insurance fraud unit in the Garda" to be funded by the industry and said it had been a successful model in the UK.
"If you were going down this route, as they have done in the UK, there is absolutely clear separation between the money that would go in to the entity and the operational powers and the decisions that get taken," the minister said.
Pearse Doherty, Sinn Féin finance spokesman, said at an extreme it suggested privatisation of a section of the Garda.
"I'm issuing a very clear warning shot that this is a slippery slope," he said.
"The precedent is terrible - so do we allow big business to employ, to fund, certain other sections of the gardaí that would be of benefit to big business?
"A precedent has already been set. This is a Government document, approved by Cabinet, that is looking to consider big business fund, directly, a section of An Garda Siochana."
Mr Doherty said that if the insurance industry is to pay more to the State then it should be paid centrally to the Exchequer and not directly fund a garda unit.
Figures from the Motor Insurers' Bureau of Ireland (MIBI) show that the level of uninsured driving in Ireland was at 7.1% in 2015.
Mr Murphy told the committee that €50m-€60m paid out each year to cover claims involving uninsured drivers adds about €30 to premiums and about €200m a year for fraud costs adds about €50 to premiums.
Mr Murphy would not be drawn on how much insurance premiums could come down or over what period if the 33 recommendations in his department's report were enforced.
"I am expecting lower premiums. They aren't going to become dramatically low like they were in the past, because that wouldn't be prudent either," he said.