The New Zealand Fire Service Commission (NZFS) has lodged an appeal against a High Court decision in favour of the Insurance Brokers Association of New Zealand (IBANZ) and Vero over composite and split-tier insurance policies.

The High Court ruled in December that composite policies are not “artificial in nature”, saying they have commercial benefits that go beyond reducing policyholders’ fire levy payment.

IBANZ and Vero took the NZFS to court seeking declarations over calculation of the levy, using a collective of eight port companies as a test case.

The Court of Appeal will be asked to reject the decision on several grounds, with the NZFS arguing the High Court misinterpreted the meaning of “indemnity value” and wrongly held that the ports’ insurance arrangement was a single composite contract of fire insurance, as opposed to individual, separate contracts recorded in one document.

The NZFS is seeking a series of new declarations of indemnity value that include using an objective value of all the property being insured when calculating the levy, rather than a nominal value agreed on by the parties.

It also wants a declaration that each of the port companies is a party to an individual, separate contract of insurance.

Insurance levies fund 95% of the NZFS and there is a long-standing dispute between the fire service and brokers over whether brokers and insurers are using loopholes to reduce the levy for commercial clients.