NSW compulsory third party reforms that took effect last Friday will bring lower average premiums and allow faster payment of claims, the Insurance Council of Australia says.

Defined benefits will provide all injured people with payments for medical treatment and care, regardless of fault, while common-law entitlements will be retained for the most seriously injured.

Benefits will start soon after a claim is made, compared with delays that could span 3-5 years under previous arrangements.

“It is anticipated that the new scheme design will reduce opportunities for claims fraud and exaggeration, which can drive up premiums,” Insurance Council CEO Rob Whelan said.

IAG, the largest compulsory third party insurer in the state under its NRMA Insurance brand, says the new scheme will be more affordable and simpler for motorists.

“IAG has been calling for long-term structural reform to the… scheme for quite some time and we’re pleased to see the changes come into effect,” EGM Consumer Distribution Amanda Whiting said.