The Victorian Fire Services Levy (FSL) Monitor has updated its guidelines for insurers in recognition of the fact that many have already dropped the charge from their policies.

The final guide which the monitor says aims to prevent price exploitation and misleading or deceptive conduct is revised from a draft released in April and also takes into account insurer feedback.

The changes mostly concern practical issues and “some of the particularities that arise from ending a system that was never designed to end”, Office of the FSL Monitor Director Rod Overall says.

“The general intent hasn’t changed,” he told insuranceNEWS.com.au. “The key requirements about compliance with the [FSL] Monitor Act haven’t changed.”

One guideline stipulates that if insurers collect more FSL than required, they are expected to refund the excess sum.

It originally called for the refund to be made direct to policyholders, but because of the practical difficulties of reimbursing small amounts to large numbers of customers, this has been amended to allow for other methods, by agreement with the monitor.

Another guideline says premiums at renewal in 2013/14 should be lower than the preceding premium by an amount equivalent to the scrapped tax.

This has been amended to include renewals before July 1 in which no FSL is charged, because many insurers have dropped the levy early.

A guideline requiring CEOs to make a declaration to each policyholder that no FSL will be charged from July 1 has been deemed impractical. Instead CEOs will provide the declaration to the monitor.

Another guideline that could have been interpreted as preventing the continuation of monthly instalment payments for contracts issued before July 1 has been rectified. It now requires insurers’ auditors to verify that insurers collect only enough FSL to meet their obligations.

Insurers must also provide accessible information to customers on the levy’s abolition that is specific to a customer’s particular policy.

Another new guideline allows for rare cases in which customers are legitimately charged the levy after July 1 because of delays processing pre-July 1 contracts.

The monitor’s decision to hold a public hearing on the levy’s removal has annoyed insurers, who see the monitor’s attitude as unnecessarily inquisitorial. Allianz and CGU have not yet indicated whether they will attend.

“The guidelines themselves are not mandatory,” Allianz Australia GM Corporate Affairs Nicholas Scofield told insuranceNEWS.com.au. “Allianz will fully comply with any guideline that reflects our obligations under the law.

“However, some other guidelines relating to the provision of historically comparable premium and tax information to policyholders go further than the law requires.

“Compliance with those creates a number of insurmountable practical difficulties, as well as being exceedingly costly. In those instances, Allianz will adopt alternative approaches that align with the spirit of the particular guideline.”

CGU is expected to decide next week whether it will appear at the public hearing, a spokesman told insuranceNEWS.com.au.