Insurers have been told they are under close scrutiny from the NSW Emergency Services Levy (ESL) Insurance Monitor as the industry grapples with the State Government’s backflip on next month switching to a property-based levy to fund emergency services.

Premier Gladys Berejiklian says the industry will not be allowed to pass on costs from the delayed reforms, and premium levels will be watched by the monitor.

Industry executives are meeting the Government to discuss ramifications from last Tuesday’s decision to delay removing the levy from property policies, and they have held preliminary meetings with Treasurer Dominic Perrottet.

Monitor Allan Fels on Friday issued a fresh notice, which takes effect today, on comparison information to be included on notices for next financial year.

“We indicated to the Treasurer that we are disappointed with the monitor moving in that way,” National Insurance Brokers Association CEO Dallas Booth told insuranceNEWS.com.au.

“We believe the monitor should be respecting the time and the efforts that are currently being put in place to actually work out what is going to happen.”

The Government is expected to introduce legislation officially delaying the start of the levy when Parliament resumes for three sitting days from June 20, when the state budget will be released.

Insurance Council of Australia spokesman Campbell Fuller says insurers have spent more than a year and tens of millions of dollars on consultants and system changes in preparation for the ESL removal from June 30.

“The resumption of ESL collection will come with significant additional costs that the industry will be forced to pass on in full to policyholders,” he said.

But Ms Berejiklian told reporters policyholders will not “be paying a single dollar more than what they would have done”, while ESL Deputy Insurance Monitor David Cousins says he is “concerned and sceptical” at comments about customers bearing the costs.

“Insurance companies should not assume they can pass on such costs to policyholders,” he said. “We will subject such claims to scrutiny.”

The Government shocked the industry last week when it announced the change will be delayed because recent Treasury modelling shows it may harm businesses, particularly the SME sector.

Ms Berejiklian says the levy will continue to be collected via insurance policies until a review is completed. No further timeline has been given.

“The ESL is a complex reform and we always knew there would be challenges during the transition phase,” Mr Perrottet said. “It’s not enough for this reform to work on paper – its real-life implementation has real-life consequences for families and businesses and we need to make sure they are not placed under unfair strain.”

The Property Council of Australia says fire and emergency services should be funded through consolidated revenue.

“If the Government were to pay for the services through consolidated revenue, it could be announced in the upcoming budget and paid for using the surplus the Government currently holds,” NSW Deputy Executive Director Cheryl Thomas told insuranceNEWS.com.au.

Models used in other states that have switched to a property-based levy “have not been without their own problems”, she says.

See ANALYSIS.