The NSW government has produced a budget that “should improve insurance outcomes” for residents, the Insurance Council of Australia says, citing the state’s new resilience package and commitment to pursuing emergency services levy reforms.

In the 2024-25 budget unveiled yesterday, the Minns government said it is investing $5.7 billion over four years, including Australian government co-contributions, to continue natural disaster support and response programs.

The commitment includes $525 million for the Resilient Homes Program across the Northern Rivers and Central West regions to support voluntary buybacks and increase existing homes’ flood resilience; and $87.4 million for the Resilient Lands Program to unlock new home and land options in Northern Rivers.

ICA says the funding for resilience is a positive step that should support efforts to improve premium affordability.

“By prioritising resilience initiatives, the government is taking a proactive approach to safeguarding lives and property from the increasing threat of extreme weather events,” CEO Andrew Hall said, adding: “The promised investments should improve insurance outcomes in the state.”

The government also reiterated that it is proceeding with plans to replace the insurance-based emergency services levy with a property levy.

“The resourcing requirements for the … emergency services agencies, largely funded by the ESL, are increasing with climate change and the growing instances of natural disasters, making insurance more unaffordable,” the budget papers say. “Under this reform, the government will remove the ESL on insurers and instead spread a replacement levy across a broad base of property owners.”

Insurers have long campaigned for emergency services levy reforms and Mr Hall says the government’s “recommitment to removing the ESL is welcome and will ease the burden on NSW insurance customers. For years, the ESL has unfairly penalised insurance customers in the state, who because of flood risk already pay some of the highest insurance premiums in the country.”

Insurer IAG has also welcomed the budget announcements.

“Investing in resilience measures such as voluntary home buybacks and planned relocation, house raising and retrofits will help improve the safety of people living in areas at high risk of severe weather, and ensure they’re better protected into the future,” CEO and MD Nick Hawkins said.

The budget papers say revenue from ESL insurer contributions and emergency services council contributions are forecast to increase by $205.6 million over the four years to 2027-28 when compared with the 2023-24 half-yearly review.

“This increase is driven primarily by additional funding to maintain and improve emergency services provided to NSW communities,” the papers say.

For 2024-25, the government expects to collect about $1.32 billion in ESL revenue. Forward estimates are for ESL revenue of $1.27 billion in 2025-26; $1.22 billion in 2026-27; and $1.24 billion in 2027-28.

Insurance duty has been revised down by $7 million for 2023-24 and $34 million over the four years to 2027-28 since the half-yearly review, due to weaker year-to-date collections.

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