The average premium for compulsory third party greenslip insurance has dropped by more than $130 in NSW, following reforms to the scheme.

48% of Sydney motorists are paying $500 or less for their greenslip, according to the state government. More than 60% are paying less than $400, compared to 25% under the old scheme.

Finance, Services and Property Minister Victor Dominello says the statewide average premium before the reform was $652.

The NSW Council of Social Service identified greenslips as contributing to cost of living pressures for motorists on low incomes.

About 55% of benefits will paid out within a year when the scheme is fully mature, Mr Dominello says. Just 6% of benefits were paid out within a year under the old scheme.

The NSW Government has also introduced an insurance profits claw-back mechanism, to hold insurers to what it says are reasonable profit margins.