The National Insurance Brokers Association (NIBA) has come out fighting against the Victorian Government’s latest charges for its fire services levy (FSL). The system now uses notional premiums where the broker or agent uses net ratings – a situation that is expected to make the system even more complex for all involved.

Five weeks ago Sunrise Exchange News reported the proposed changes to the collection of Victorian FSL in relation to “net rating”.

In a letter to the Metropolitan Fire and Emergency Services Board, NIBA CEO Noel Pettersen says attempts at directing insurers on how they should levy individual policyholders can only increase the administrative complexity of the arrangements.

“Imposing additional FSL on large corporations that direct their insurance broker to approach an insurance company for property insurance on the basis that no commission or brokerage would be paid to the broker would simply add to the cost of insurance,” Mr Pettersen said.

“It would provide only a modest increase in the relevant insurance company’s pool of funds for the Victorian fire services.”

Mr Pettersen refers to a July 2003 report by the state’s Treasury Department which considered the equity and efficiency of the current Victorian FSL arrangements.

“It concluded there were major issues with the current arrangements, highlighting difficulties with those who did not insure or who underinsured, and with the owners of motor vehicles that made no direct contribution to fire services.”

He says minor mention was made in the report of net rating, and it was certainly not regarded as a big equity issue.

“It is interesting the Government in considering the report ignored the major equity issues and decided without any industry consultation to change the current net rating arrangements,” Mr Pettersen said. “Clearly the Treasury does not believe that equity and efficiency would be greatly improved by changes to net rating.”