The NSW Government has failed to respond to concerns that taxes will soon account for more than half of home and contents premiums in the state.

The Insurance Council of Australia (ICA) says from July 1, after increases to the state’s Emergency Services Levy (ESL) kick in, the tax component of home and contents premiums will rise to more than 50%.

For commercial policies it will be even higher – GST, state stamp duties and the levy will account for 60-70%.

insuranceNEWS.com.au asked the NSW Treasury whether it is appropriate for taxes make up more than half of the cost of insurance premiums, and whether it agrees with ICA concerns that such high taxes could exacerbate problems of underinsurance.

But Treasury did not acknowledge the issue – instead sending a statement from Minister for Police and Emergency Services David Elliott justifying the ESL increase, which will pay for improved access to workers’ compensation for firefighters diagnosed with cancer.

“The NSW Emergency Services Levy will increase to ensure our firefighters receive the medical care and support they need and deserve,” he said.

“The extra support will be funded as part of a cost-sharing arrangement with insurers, councils and the Government.

“Insurers will meet 73.7% of the cost, Government will provide 14.6% and councils 11.7%.

“This cost sharing arrangement is consistent with how the Emergency Services Levy has been funded historically.”

The “historic” arrangement was set to be replaced by a broad-based property tax, prior to a last-minute Government u-turn in 2017, which left the insurance industry facing costs of $40 million.

insuranceNEWS.com.au repeated its questions, but has so far been meet with silence.

ICA says it recognises that firefighters’ workers’ compensation liabilities need to be funded, but believes “this should come from consolidated revenue, as is the practice for other government workers”.

Research commissioned by ICA indicates the levy increase will lead to a $20 million reduction in pre-tax expenditure on insurance.

LMI Group MD Allan Manning, who has campaigned for the removal of insurance taxes for years, says a 50% tax is “obscene”.

“There is something wrong with the whole process,” he told insuranceNEWS.com.au.

“We are getting taxed like alcohol and tobacco. You can understand high taxes on those things, because of the impact on the health service, but the role of insurance is to take the burden off government.”