The insurance industry realises it needs a terrorism insurance law, and it got one last week when the Senate voted in its favour. But the way in which the scheme is to be funded hasn’t found similar unanimous support.

The National Insurance Brokers Association (NIBA), for one, has welcomed the Act because it protects businesses against the financial impacts of terror attacks. But it has re-ignited the “hidden taxes” issue again by reminding the public it’s now paying four levels of tax (five in NSW) on top of their premiums.

The Government will establish a reinsurance pool of $300 million funded by an additional premium on commercial insurance of 2%, 4% or 12%, depending on the location of the building.

NIBA CEO Noel Pettersen said the new impost served to illustrate just how “over-loaded” premiums are. “While the need for a terrorism insurance pool is supported by the community, it’s time for unnecessary taxes to be removed,” he said. “Governments must understand that premium taxes are discouraging people and businesses from insuring at prudent levels, or even from insuring at all.”

NIBA wrote to the Federal Treasurer last November to voice its concerns about the levy. Since then the HIH Royal Commission has called for the abolition of all taxes on premiums, which royal commissioner Neville Owen described as “inequitable and discriminatory”.

Mr Pettersen said it’s time for governments around Australia to heed the royal commission’s recommendation and remove “all other taxes which are there purely to raise revenue”.