Compulsory third party (CTP) insurance premiums will rise once the system is privatised next year, the South Australian Government has confirmed.

The Government says drivers will face incremental increases for the first three years of reform, in line with what it described as "CPI-like" rises.

The privatisation was flagged in last year's state budget, with the Government stripping $500 million from the Motor Accident Commission.

The commission will cease to be the sole provider of CTP insurance in July next year.

Treasurer Tom Koutsantonis today gave details of the insurance changes in State Parliament.

He said that, after the three years, premiums will be in the hands of the market.

"As we continue down the path of CTP insurance reform, the Government will continue to engage widely with key stakeholders to ensure a smooth transition with minimal impact on motorists," Mr Koutsantonis said.

He said an "industry-specific CTP regulator responsible for setting and controlling premiums" would be introduced to ensure premiums remained reasonably priced.