New Zealand’s highest court will decide how the fire services levy is applied to commercial premiums, after the Fire Service Commission was granted leave to appeal.

The case reaches the Supreme Court having passed through the High Court and the Court of Appeal, which both ruled in favour of the Insurance Brokers Association of New Zealand (IBANZ) and Vero over how the levy is applied to composite premiums.

Insurance levies fund 95% of the fire service budget. The commission has argued brokers and insurers use loopholes to reduce the charge by breaking up contracts or bundling groups of clients to buy a single policy.

The High Court says composite and split-tier policies are not artificial in nature and while the Appeal Court judges agree, they say the law needs to be changed to take account of composite policies.

IBANZ CEO Gary Young told insuranceNEWS.com.au the Supreme Court appeal will begin in December and is expected to take a day and a half.

The insurance industry wants the levy replaced with a charge on council rates and vehicle registrations.