Insurers and lawyers have welcomed a major reform to Greenslip??? insurance announced by NSW Finance Minister Victor Dominello that is expected to cut premiums by $120 a year, but only after the government was forced to backtrack on some of the harshest aspects of the scheme.
The government said the reform, which was two years in the making, will reduce costs for motorists and extend a six-month income-replacement safety net to all injured road users - including, for the first time, at-fault drivers.
It will do so by crimping the profits of insurers, cutting fraudulent and exaggerated claims, and by putting a six-month limit on benefits for less-severe motor accident injuries, effectively cutting off support for "soft tissue and minor psychological injuries" after that point.
Legal experts estimate up to a third of people injured in motor accidents will lose the right to benefits after six months from the date of their accident under the new scheme.
The government was forced back to the drawing board on Greenslip reform in October after an outcry from lawyer groups, but with the legislation set to go to Parliament this week it had secured in-principle support from its former harshest critics.
NSW drivers pay the highest CTP premiums in Australia, at $703 for the average Sydney motorist - an increase of 85 per cent on 10 years ago. The government attributed this to a significant spike in minor injury claims, insurer profits and fraud.
Ms Berejiklian said "just 45?? in every Greenslip dollar is returned to injured road users. The rest is chewed up in scheme costs, including insurance company profits and legal fees."
Under the new scheme, the government said, 60?? in every dollar will return to injured road users, and provide "Greenslip relief" to every motorist.
However, the Labor opposition was sceptical about how the government would ensure premiums come down.
Mr Dominello secured the backing of groups that stand to lose financially from the changes in a field of vested interests memorably summarised by a previous minister as resembling "the first 30 minutes of Saving Private Ryan".
Andrew Stone, SC, of the Australian Lawyers Alliance, said the government's initial scheme would have meant some people with severe, lifelong orthopaedic injuries would have been cut off from benefits after five years.
"What we have now is a much fairer alternative where people with significant orthopaedic injuries, who cannot work as a result of their injuries, will be compensated for a loss of income," he said.
"There's no doubt that the scheme needed reform. It's always disappointing to see any benefits being cut, but these reforms at least focus on paying the largest amounts to the most seriously injured."
He estimated up to 3000 injured people a year would lose their benefits under the new scheme, while preserving benefits to a further 4000 to 6000.
For years, NSW CTP insurers have enjoyed what the Premier called "super-profits" of about 20 per cent on Greenslip. Under the new scheme, the regulator would claw back profits above 8 per cent, the government said.
Despite this, Rob Whelan from the Insurance Council said the industry was pleased with the reforms, which removed "volatility" from the scheme and made costs more predictable for insurers. He could not say how much fraud had cost the CTP scheme.
"We knew this scheme was under stress and needed reform," Mr Whelan said.
"Insurers believe a defined benefits scheme that provides payment for medical treatment and care, while retaining some common-law entitlements and directing the majority of funds to the more seriously injured people who need them most, will reduce the need for legal intervention and will lower premiums."
Taxi drivers also welcomed the announcement of a one-third reduction in taxi Greenslips, which can cost up to $9000.
The government said households should notice their reduced premiums within six months of the legislation coming into force.