The Motor Accidents Authority (MAA) has called for an overhaul of the NSW compulsory third party insurance (CTP) scheme, to make it more efficient and affordable.

The state operates a fault-based CTP scheme, which has been criticised by various stakeholders for being inefficient, expensive and unfair.

The MAA says in a report that the scheme’s “complex technicalities” lead to disputes and unnecessary costs and delays that “do not help the injured person but increase green slip premiums”.

“Motorists in NSW are paying on average $500 a year for CTP insurance – up to $260 more than other states – while injured people are waiting years to receive benefits,” NSW Premier Barry O’Farrell and Finance and Services Minister Greg Pearce say in a joint statement.

They say the scheme is a “lawyers’ picnic”, under which less than half of premiums collected go towards accident victims.

The MAA says NSW is the most expensive state for CTP insurance, with annual premiums at 37% of average weekly earnings. States such as Victoria operate at 27%.

It says the scheme is “highly inefficient”, with contributing factors that include insurers’ expenses, such as acquisition costs; higher-than-expected profit margins because of the “uncertain” nature of the scheme; and legal and overhead expenses from negotiating settlements.

The rising number of claims has also put pressure on green slip pricing, the MAA says.

Instead of lengthy disputes over who is at fault, the MAA wants a no-fault scheme that will cut waiting times on payments. The scheme currently makes about 52% of payments within three to five years of an accident.

Limited common law entitlements would remain in the program and only be applicable to those with injuries meeting the “greater than 10% whole person impairment” threshold.

The MAA also wants a stronger role for itself, with powers to set guidelines and take action against insurers that fail to comply.

The proposed revamp follows an MAA review of CTP pricing, which considers ways to lower premiums through regulation “that results in an equitable but not excessive profit margin for insurers”.

The NSW Government has begun consultation on the proposed reforms. Feedback can be submitted online until April 5.