The Insurance Council of New Zealand (ICNZ) says the Government has shown common sense in exempting travel insurance and certain types of property such as swimming pools from the fire service levy.

The levy to fund Fire and Emergency New Zealand (FENZ) applies to policies that cover people for material damage to property. Parts of the FENZ Act took effect on July 1, with the new funding regime coming into force from January 1 2019.

“Without this decision, people who took out travel insurance to holiday overseas would have been taxed, even though there was no way FENZ would have provided any service all,” CEO Tim Grafton said.

“We now expect a similar common-sense approach to apply to liability insurance, which provides cover for any loss, not just material damage, to third parties.”

Insurers and brokers have argued against the fire service levy, saying it puts an unfair burden on policyholders, who effectively subsidise the emergency services for those who do not take out insurance.