Victoria’s new method of funding its fire services could hit businesses, the Australian Property Institute (API) has warned.

The State Government says the new system – a property-based charge added to council rates rather than insurance premiums – is fairer.

But API spokesman David Corrigan argues businesses could be worse off.

“I did some investigation into a number of different scenarios and I was getting alarmed by what I was hearing on the commercial front,” he told insuranceNEWS.com.au.

The levy comprises a flat rate of $100 for residential property and $200 for all other property, plus a rate in the dollar per $1000 of valuation.

In the Country Fire Authority (CFA) area, the rate is 11.5% for residential, 109.2% for commercial and 170.9% for industrial.

“There is no doubt in my mind – with the sheer rate in the dollar that has been set – that it is going to kick businesses,” Mr Corrigan said.

However, he says it is impossible to make precise comparisons because he does not know exactly what companies paid under the old system.

The differences in rates for CFA and Metropolitan Fire Brigade areas would suggest the former is being hit harder.

But Mr Corrigan says the metropolitan brigade covers a more populated area and valuations in the CFA area are likely to be significantly lower.