A new definition for severe mental injury was introduced into law last year, requiring people to prove they had significant symptoms for at least three years after they were in a car accident to be eligible for common law compensation. Leading psychiatrists have criticised the test as too harsh and say it excludes many people who should be able to make a claim.

It is understood that the commission has not processed any claims for severe mental injury compensation under the new criteria since it was introduced in October 2013.

A letter obtained by Fairfax Media reveals that the Transport Accident Commission lobbied the government for two years for the change because it believed the old threshold for mental injury compensation was not financially sustainable.

The commission's chief executive officer, Janet Dore, wrote to former board members last month about its progress in the final year of a six-year review of its finances and services called TAC 2015.

Ms Dore said there had been a $142 million "actuarial release" - saving to the TAC scheme - this financial year, taking its total savings to $252 million, with no "hotspots" identified by actuaries for the first time in her tenure.

"The cumulative result reflects significant erosion of the mental injury threshold which was threatening long term financial sustainability. It required two years of work to achieve legislative change to manage this issue," she said.

"Without those impacts we would have hit our original release target ($600 million in savings) easily but we are still focused on it in within the next couple of years."

Ms Dore confirmed she had written the letter, saying: "The TAC has a responsibility to ensure that the scheme remains accessible and financially viable into the future to support those who are injured on Victorian roads and that claimants are treated consistently under the scheme."

The saving compares with the commission's "negative $102 million" in savings for the scheme last year. It said in its annual report the improvement was due largely to "strong claims management".

The commission made a $499 million profit this financial year, down from its $973 million profit last year.

When the law was changed Assistant Treasurer Gordon Rich-Phillips said the government was not seeking to restrict access to compensation, but to ensure that compensation claims for mental injury were made "consistently".

Only people who show symptoms of a "recognised mental illness", a consequent disability that has not responded "to known effective clinical treatments" and who have a "severely impaired function with symptoms causing clinically significant distress and severe impairment in relationships and social and vocational functioning" for at least three years can claim damages.

Previously, independent medical examiners assessed mental impairment by looking at a person's social interactions, job and general health.

The psychiatrists who created the tool previously used to assess mental injury claimants have said the new test unfairly discriminated against people with a severe, long term mental disorder.

One of them, Dr Nigel Strauss, warned that most seriously ill psychiatric patients would miss out on compensation under the new criteria.

John Voyage, head of Maurice Blackburn's Transport Accident Commission department, estimated dozens of people were no longer eligible for mental injury compensation this year.

Mr Voyage said there was no independent data to suggest that the previous threshold was financially unsustainable for the commission.

Compensation helped people move on with their lives, including those unable to work because of psychiatric problems, he said. "As a society we previously said they were deserving of compensation. As of a year ago we are saying those people are no longer deserving of compensation."

A spokesman for Gordon Rich-Phillips declined to comment, saying that this was a matter for the Transport Accident Commission.