CAR registration fees will drop by a one-off $110 from July as part of sweeping reforms to the compulsory third party insurance scheme.

The two-stage overhaul of the CTP system will also see everyone who suffers catastrophic injuries in a car accident receive life-time compensation payments - regardless of who was at fault - in a move that will trim the ongoing registration saving to $50 from July 1, 2014.

The long-term $50 saving on registration fees, as well as the new system to cover all those badly injured in accidents, will be possible because of changes that also cut compensation for relatively minor injuries and lower the legal bills paid by the State Government to plaintiff lawyers.

In the biggest changes to the compulsory third party (CTP) scheme since its introduction in 1936, the Sunday Mail understands the two-stage change will result in:

A NEW no-fault scheme delivering lifetime medical care and support to anyone catastrophically injured in a vehicle accident.

LUMP sum payments for such victims replaced by lifetime fortnightly payments.

A NEW points system to more clearly define injuries, to help courts decide compensation payments for non-economic loss.

COMPENSATION for non-economic loss and future income maintenance limited to people whose injuries exceed 15 points on the new scale, and compensation for other victims for past and future economic loss set at 80 per cent of income.

LEGAL costs paid by the Motor Accident Commission to plaintiffs no longer paid for claims less than $30,000, and capped at $2500 for claims up to $50,000.

The reforms to the legal aspects are expected to come into force next July, initially cutting CTP premiums built into car registrations by $110.

A year later, on July 1, 2014, a new "catastrophic injury levy" will come into force which will reduce the annual car registration savings to $50 but will mean all people catastrophically injured will receive cover for lifetime care.

Under the existing fault-based scheme almost half of people catastrophically injured in accidents each year receive no cover because there is no one to sue, such as an accident caused by a driver hitting a kangaroo or falling asleep at the wheel.

The new scheme will also cover people at fault for their injuries such as someone who has an accident while hoon driving.

Legal costs for the Motor Accident Commission have soared in the past three years, both for its own barristers and for the legal bills of plaintiffs who win or settle their cases.

The bill for MAC's barristers jumped from $1.5 million to $2.2 million, while legal costs against it where plaintiffs won or settled their cases rose from $28.7 million to $33 million between 2009/10 and 2011/12, after spiking at $34.5 million in 2010/11.

While no one will lose the right to sue, the abolition or capping of reimbursement of legal fees in relatively minor cases will be a significant saving for the commission.

Lawyers critical of aspects of the planned reforms have warned against watering down victims' rights based on their injuries, and say replacing lump sums with regular payments may create budget blowouts similar to WorkCover.

Tyele Riddle was an 18-year-old P-plater when she crashed after a bird swooped towards her windscreen while she was driving in the Riverland in 2008.

After three months in intensive care for injuries including a broken back, then nine months in the Hampstead Rehabilitation Centre, she is now a quadriplegic.

With no other at-fault driver to sue she was not covered by insurance.

"I was shocked to find I was not covered and I do not want anyone else to end up in the same situation as me," Tyele said.