Brokers are becoming increasingly frustrated by the varying fire services levies (FSL) passed on to policyholders and the unpredictable times that insurers choose to charge them.

FSL charges are forced on insurers by the Victorian, NSW and Tasmanian governments, and insurance companies are then left to decide what rates to charge policyholders and when.

But brokers say the lack of consistency and frequency in which insurers are choosing to pass on FSL increases is unacceptable.

Ivan Vojlay, a director of Melbourne-based brokerage Stewart Haig Insurance Brokers, says brokers in his business are finding it hard to keep up with the changing FSL rates insurers are passing on to policyholders.

“The ridiculous situation is that each company has their own timeframe as to when the new rates apply from, and are different in respect of renewals and new business,” he told Sunrise Exchange News.

He says there has to be a better alternative to changing FSL so frequently.

For example, this quarter QBE changed a number of its FSL rates. Its fire/ISR/consequential loss, construction risk, and motor premiums in NSW remained steady, but home and contents FSL rates increased 4% to 18%.

In Victoria, QBE also made a number of changes to its FSL rates across country and metro Victoria. Fire/ISR/consequential loss rates increased 2% in the city to 50% and dropped 10% to 40% in the country. Country home and contents FSL rates dropped 14% to 40%.

In a newsletter to brokers, QBE said the revisions are to account for “an increase in budgets for the fire services affected and movements in premiums charged”.

Mr Vojlay says the current situation means every time one insurer informs a broker of FSL rate changes, brokers need to contact all other major insurers to establish when they will change their rates and by how much.

This results in a communication nightmare where a large number of brokers are contacting the insurers for the same information.

“We have also had conflicting opinions from different officers in the same companies, which has caused further confusion,” he said. “We also understand that some insurers are unhappy about having invited renewals at one rate, and then themselves being charged a higher rate, as renewals are invited some two months ahead.”

Insurance Council of Australia spokesman Rod Frail says FSL rates are being set out quarterly at the request of insurers.

“This is because every time there is a drop in commercial rates in the current falling market, there is an under-collection of FSL unless rates are adjusted,” he said. “It is yet another example of how inequitable and untenable the current system is.”

National Insurance Brokers Association Chief Executive Noel Pettersen says the current FSL system is a problem for brokers and consumers, and NIBA has taken up the issue with ICA.

“Everyone involved has acknowledged that there’s a problem with the system, and Mr Vojlay’s comments illustrate this perfectly,” he told Sunrise Exchange News. “What makes it worse is governments have been alerted to the problem and they just don’t seem interested in helping.”