Proposed changes to New Zealand’s emergency services funding could lead to severe levy rises for commercial property owners, increasing non-insurance risks, brokers have warned. 

The Insurance Brokers Association of New Zealand calculates the total levy collected across commercial property could double under plans outlined in a consultation. 

“IBANZ members are already seeing clients cancel or reduce cover as they manage the effects of prolonged high inflation and increased insurance costs,” CEO Mel Gorham said. 

“This change will clearly impact premium affordability and lead to more underinsurance or decisions not to insure at all.” 

Changes to the Fire and Emergency New Zealand levy are due to take effect from July 1 2026, but decisions on how it will be collected are needed by December to allow time for the insurance industry to introduce the reforms. 

Proposed changes include a shift to calculating the basis for applying the levy to sum insured, typically used in insurance policies. Currently, an indemnity value method is used specifically for applying the levy on commercial building insurance. 

Ms Gorham says it is not unusual for the indemnity value of buildings that are older or in poor condition to be as low as 25% of sum insured, and the modelling for calculating levy reforms has not considered the full impact of changing the valuation. 

“We have always said there was a risk of issues of affordability if they didn’t take into consideration what we’ve been telling them about the difference between the sum insured and the indemnity value,” she told insuranceNEWS.com.au. 

IBANZ says as building values rise, feedback from members is that levies will increase by as much as 400% by July 2026 if properties are to remain appropriately insured. 

A consultation paper says the non-residential property rate will fall under the plan to NZ11.51 cents per $NZ100 insured from NZ11.95 cents, but Ms Gorham says the reduction is not nearly enough given other impacts, which also include extending the regime to assets currently exempt and where Fire and Emergency New Zealand (FENZ) services are unlikely to be used. 

Those assets would include aircraft, marine vessels at wharves, marinas or tethered at sea, crops and livestock that are likely to be long distances from a fire station and difficult to access, plus water tanks and retaining walls that tend not to be affected by fire.  

Most New Zealand airports provide their own crash firefighting capabilities funded through landing fees, while applying the levy to search and rescue helicopters would boost their insurance costs. 

“These types of aircraft are often used to provide firefighting assistance to FENZ, meaning the cost of the levy is likely to be passed back to FENZ through the fees charged for the services they provide” IBANZ says. 

FENZ says it will summarise feedback it receives to help the Minister of Internal Affairs make recommendations. Submissions on the consultation paper closed last week.