The Insurance Council of Australia (ICA) has pleaded for understanding if overcharging occurs during the phasing-out of NSW’s emergency services levy (ESL).

The levy on insurance policies will be replaced by a property charge from July 1 next year.

In a submission to the ESL Insurance Monitor Allan Fels, ICA notes issues during the removal of the fire services levy in Victoria in 2013.

It highlights the “simplistic prohibition” of overcollections, saying due to the complex predictions required it was “highly likely” over or undercollection would occur.

“The member experience in Victoria was that an overcollection was automatically interpreted as price exploitation,” ICA says.

“[ICA] respectfully requests the monitor to recognise the difficulty members face in recovering the exact amount of their statutory contributions through an ESL.

“All the factors referred to in the monitoring legislation should be considered before an allegation of price exploitation is made.”

Claims of price exploitation are extremely damaging to insurers’ reputations, the submission says.

Meanwhile, QBE has announced it will cease charging NSW ESL on all private and commercial motor policies from July 1 this year.