Awards for minor personal injuries claims are set to drop by up to 50% from today.
The new guidelines are aimed at reducing insurance premiums for consumers in Ireland.
Peter Boland, director of the Alliance for Insurance Reform, said these new guidelines should lead to an immediate drop in costs for insurance customers.
"Insurance premiums are based on future risk," said Mr Boland. "Every accident that happens from Monday will be subject to the new guidelines.
"So the risk associated with every new motor and liability policy in Ireland will drop significantly from Monday, and that must be reflected in the costs of those policies."
The new guidelines were approved last month by the Judicial Council and followed meetings between the Junior Minister for Finance Seán Fleming and insurers.
Earlier this month, Mr Fleming said insurers have indicated they plan to reduce premiums.
"They have all said they will start doing it early in the second half of this year, after June," said Mr Fleming.
Previously payouts for personal injury claims in Ireland are on average 4.5 times higher than similar claims in England and Wales.
However, CEO of Motor Insurance Ireland Moyagh Murdock said the new guidelines on insurance awards have not yet had an impact on court cases in the system.
She said she welcomed the new guidelines on insurance payouts which “bodes well” for reduced awards for soft tissue injuries and that it will take some time for the remaining cases to be “flushed through the system”.
The insurance chief said claims were only one element in terms of the cost of insurance premiums and that the new guidelines should reduce the need for litigation.