NSW will introduce a hybrid no-fault compulsory third party scheme in December after Parliament last week approved replacing the current at-fault system.

Average motor premiums will fall from $700 to about $520 for vehicle owners in Sydney, and from $480 to $430 for rural drivers.

“This is a big win for motorists and fulfils a government promise to deliver a fairer and more affordable scheme,” Minister for Finance, Services and Property Victor Dominello said.

“The new scheme will deliver cheaper greenslips, stamp out exaggerated claims and eliminate insurer ‘super profits’.”

Under the current scheme, injured road users receive only 45 cents for every greenslip dollar collected, with the remainder consumed by costs including insurer profits and legal bills, according to the State Insurance Regulatory Authority (SIRA).

The new program will ensure 57% of every premium dollar goes towards aiding the injured, and the introduction of statutory and no-fault benefits will reduce costs in several ways, including removing access to common law damages for soft tissue injuries.

It is also designed to reduce fraudulent and exaggerated claims, which cost NSW motorists as much as $400 million every year.

SIRA will consult with stakeholders to establish the scheme’s guidelines and regulations.