State insurance taxes are aggravating Australia’s underinsurance problem, Shadow Treasurer Malcolm Turnbull told the Association of Financial Advisers (AFA) last week.

He says taxes such as fire services levies in Victoria, NSW and Tasmania are “notoriously inefficient”.

He told the AFA luncheon in Sydney research by Access Economics shows insurance taxes also boost underinsurance, in turn affecting the economy and putting the burden on taxpayers.

“Insurance taxes hinder the efficient allocation of risk and deter many individuals from taking out market insurance,” he said.

“Well-functioning private insurance markets save taxpayers money,” he said. “They allow individuals to become resilient without government assistance.”

Mr Turnbull encouraged the AFA to submit to the Opposition’s review of Australia’s taxes headed by economist Henry Ergas.