Underinsurance in regional Victoria is likely to get worse when a record increase in fire services tax hits regional Victoria. Rod Hill Deloitte Touche Tomatsu partner and tax specialist, said the latest changes mean the three taxes on fire policies “look like exceeding the premium itself”. 

 “More people will drop out of the system, paralleling what happened with private health insurance,” he said.

The increases are the result of a 32% increase in the Country Fire Authority budget – a whopping $38 million more.

NSW and Victoria are the two stand-out states when it comes to taxes on insurance, Mr Hill said.

A spokesmen for the Police and Emergency Services and Corrections Minister Andre Haermeyer confirmed the $156.1 million budget for 2001-2 will be passed on to insurers. 

Mr Hill said he could not reconcile the incentives that were introduced to encourage health insurance with the heavy tax burden placed deliberately on those who insure their business and homes.  He said these were “disincentives for either insuring their properties or insuring them fully”.