Insurance industry moves to kill off the fire services levy (FSL) system have spread to New with Insurance Council of NZ CEO Chris Ryan describing the current system as “broken”.

The NZ FSL is charged in a similar way to that of NSW, Victoria and Tasmania, with a levy applied to personal and commercial insurance premiums.

There is broad agreement between leaders of the NZ fire services and insurance industry that the system is in need of reform. Representatives attended a NZ Government administration select committee meeting last week to outline their concerns.

Mr Ryan told insuranceNEWS.com.au the cost of the levy promotes underinsurance and levy evasion in NZ, with taxes adding 40% to premiums in some cases.

“We think this is the right time to raise it,” he said. “Some of the debate going on in the Australian industry has assisted us in doing that.”

Insurance industry contributions currently add around $NZ300 million ($233 million) to the coffers of local fire services each financial year.

Mr Ryan says alternative systems such as a property-based tax or a general tax-based system are preferable to the current system.

“The current system is not working,” he said. “Even if they try to raise the levy it doesn’t work because people find innovative ways not to pay their full share.”

Grouping multiple assets under one policy was one method being used to avoid paying multiple levies, he said.

Mr Ryan says there are positive signs the NZ Government is now willing to address the issue.