The insurance industry has rejected accusations of overcharging during the final months of the Victorian fire service levy (FSL).

The Insurance Council of Australia (ICA) has issued a statement denying insurers are over-collecting after media reports that policyholders will be levied twice – because insurers are charging a full year’s FSL covering periods after the levy ends and customers will then pay through their council rates when the property-based tax starts next July 1.

ICA says insurers are required to meet their statutory obligations to the fire services and must collect the amount set by the Government up to June 30.

“The FSL collected in the 2012/13 fiscal year funds the fire services for that year alone, and not for the 2013/14 fiscal year, which is when the new property-based charge will take over funding Victoria’s fire brigades,” it says.

“Therefore, double-dipping is not taking place and consumers are not being taxed twice overall.”

Anti-FSL campaigner Allan Manning says the issue has arisen because the Government refused to allow a transition period when the FSL component of premiums would gradually decrease while the property charge increased.

Professor Manning says the industry accepted the “bitter pill” of how the tax change would be introduced, having tried to convince the Government to allow a gradual transition, which has worked well in other states.

“We have given it our best shot,” he told insuranceNEWS.com.au. “Now the Government is blaming us and we are sick of it.”

ICA says policyholders can shop around for the best deal on their insurance premium, including the FSL component.

Insurers have told insuranceNEWS.com.au they are likely to start decreasing their FSL charge once they are close to collecting their obligation. As June 30 approaches competitive instincts may result in a fall in some levies.