The Insurance Council of Australia (ICA) is in talks with NSW Treasury over a surge in the emergency services levy (ESL) over the next two years.

ESL contributions will jump from $780 million this fiscal year to $967 million next year and $1.13 billion the following year as NSW improves firefighters’ access to workers’ compensation and buys more aircraft to tackle bushfires, a half-year budget review shows.

“ICA and its members are assessing the impact the budgeted increases in ESL contributions will have on insurers and customers,” spokesman Campbell Fuller told insuranceNEWS.com.au.

NSW continues to fund more than 80% of its fire and emergency services costs through a levy on insurance, after dropping a planned switch to a property-based council charge in 2017.

The budget update says the workers’ compensation cost will be largely recovered through the ESL, insurance duty and local government contributions, increasing revenue by $602.9 million over the four years to 2021-22.

The workers’ compensation changes will make it easier for firefighters to receive benefits if diagnosed with one of 12 specified cancers, because they will no longer have to show the illness was caused by their work.

The state is also buying a large air tanker and two twin-engine aircraft for the Rural Fire Service, causing the ESL and insurance duty to rise by a one-off $21.3 million in 2020-21.

Funding of emergency services through insurance is to continue indefinitely after the Government last month rejected reintroducing a property-based levy if it wins next month’s election.

In response to a parliamentary committee’s report on the issue, the Berejiklian government says it “has no plans to introduce a revised fire and emergency services levy in the next term of government”.

NSW customers pay the most tax on policies of any state, ICA says, with the ESL, GST and stamp duties typically adding 45% to the base premium for a household policy.

“ICA continues to advocate for a fairer and more equitable funding model for NSW’s emergency services,” Mr Fuller says.

Continuation of the levy has increased tension between the industry and ESL Insurance Monitor Allan Fels, whose role has been extended to June 30 next year.

ICA has accused Professor Fels’ office of exceeding its mandate and has criticised a review of pricing differences between new and renewing customers.

A letter to ICA from Deputy Monitor David Cousins rejecting the criticisms has been posted on the monitor’s website.