NIBA has stepped quickly into the breach to protect brokers’ interests threatened by the controversial NSW Insurance Protection Act.

The Act passed by the NSW Parliament last week is intended to raise $69 million a year to fund the rescue package for HIH policyholders holding mandatory NSW insurance. It contains a provision that forbids insurers to “pass on” the tax to consumers.

After obtaining legal advice that confirmed brokers would be caught as a “collector” of the tax which could not then be recovered from clients, NIBA CEO Noel Pettersen went into urgent talks with the Treasury. “The legislation prevents brokers from recovering the tax from their clients,” he said. “Under such arrangements, some brokers – particularly smaller ones – could be ruined. In any event, the levy would be a significant burden on almost all brokers that do business in NSW.”

Mr Pettersen said the office of NSW Treasurer Michael Egan has confirmed that the broker situation was “an unintended consequence” of the legislation. “It’s my understanding that the Act wasn’t intended to apply to brokers, and the Government will not hold brokers liable.”

NIBA is now awaiting confirmation of this position from the State Treasury.