Fifty-six insurers have collectively repaid $26.9 million related to Victorian fire services levy (FSL) over-collection and price increases.

Fire Services Levy Monitor Allan Fels says about 20 brokers and intermediaries also charged $200,000 after the levy was abolished on July 1 2013. Under an amnesty last year, six brokers and two insurers refunded $314,000 to policyholders.

Professor Fels’ final report on the FSL transition says insurers exercised pricing restraint because he was closely watching their behaviour.

“This does raise a potential concern as to whether premiums may rise faster than otherwise after the FSL Monitor’s role ceases.”

Professor Fels’ role ended on December 31.

He says price competition in the residential insurance market “is not particularly vigorous” and despite a large number of insurers and some new entrants, there are substantial price differences for very similar policies.

Over-collection was almost industry-wide because insurers had to estimate their contributions in the levy’s final year.

The repayment of levy over-collections “would not have been likely with a more light-handed regulatory approach”.

Of the $26.9 million refunded, $11.3 million related to price increases just before the FSL was axed, while the remainder related to over-collection, pricing errors and charging the levy after it stopped.

Professor Fels says there was a lack of clear and consistent disclosure about the levy on residential policies, and poor communication from insurers.

But he accepts insurers had a tight timeframe for the transition to a property-based levy.

Insurers paid $549 million to fire services in the last financial year of the tax, or 22.5% of residential base premium and 63.2% of commercial base premium. GST and stamp duty added another $115 million.