The Insurance Council of Australia (ICA) has criticised the NSW Office of State Revenue (OSR) for reinterpreting legislation that would more than double the duty payable on several occupational indemnity risks.

ICA “strongly disagrees” with the OSR’s reclassification of these risks – found in Section 233 of the Duties Act 1997 – as Type A rather than Type B.

Type A insurance attracts 9% duty, while Type B insurance incurs 4%.

The reclassified risks comprise libel and slander, dishonesty, loss of documents and infringement of intellectual property rights.

Also included are breach of fiduciary duty, fidelity and breach of fair trading legislation, including the Competition and Consumer Act 2010.

ICA CEO Rob Whelan says the OSR has ruled these risks arise from the actions of a “professional”, not a “professional service”, and hence should be treated as Type A.

However, he believes interpretation of the Act should be broader, with emphasis on the words “other services”.

“Furthermore, the OSR’s interpretation conflicts with long-standing market practice that has been accepted by the NSW Government for more than 26 years,” Mr Whelan says in a submission on the changes.

“It is customary that professional indemnity insurers not charge extra for the risks; they are captured within the scope of a standard professional indemnity policy and do not attract a separate premium.”

He says the OSR’s interpretation would create uncertainty and unnecessary complexity, leading to unnecessary administrative costs for professional indemnity insurers and higher insurance prices for professionals.