The New Zealand Government has confirmed that urban and rural fire services will be merged into one organisation that will continue to be funded mainly through levies on insurance policies.

Internal Affairs Minister Peter Dunne outlined the outcome of the fire services review on Friday, but stopped short of defining the precise model of funding to be used, saying further work will need to be done.

Insurance Council of New Zealand (ICNZ) CEO Tim Grafton told insuranceNEWS.com.au the review stated from the beginning that alternative funding models would not be considered, “so from that point of view there is no news”.

ICNZ previously said in its submission to the review that excluding general taxation and property-based funding models “made a mockery” of the consultation process.

It joined with other insurance industry submissions in supporting an alternative known as option two. This would provide funding from a mixture of sources, predominantly insurance levies but also including contributions from the Government and the motor vehicles sector.

“The minister gave no indication as to which option they would proceed with,” Mr Grafton said.

“We are still hopeful that they will go for the option two model.”