The eradication of the Fire Services Levy in Western Australia will halve the level of general insurance taxes by the end of this month, according to ICA.

Under the state’s new emergency services funding system to be introduced next July, the FSL will be lifted from all general insurance policies by December 31 this year.

Prior to the introduction of the levy, insurance policyholders were subsidising others who didn’t buy insurance or insured offshore. The situation was seen as a strong disincentive to insure.

The new system allows an Emergency Services Levy (ESL) that will spread the cost of funding of emergency services among all property owners instead of only those who insure.

“This is good news considering that affordability is a leading factor when people consider protecting their assets with insurance,” ICA Group Manager Western Division Daryl Cameron said. “In particular, it may provide an incentive for the one in six small businesses and one in four householders in this state that currently have no insurance.”

The ESL will make property insurance more affordable by saving up to 19% on an average household policy and up to 31% for WA businesses. “This replaces the old system in which the cascading effect of stamp duty, GST and the Fire Service Levy added over 40% of tax on top of the basic insurance premium for home and contents policies and up to 50% on property insurance for businesses in WA.”