Insurers are ready to transit to NSW’s new system of funding its fire and emergency services via a property charge after Parliament passed legislation last week to abolish the existing levy on insurance policies.

The Insurance Council of Australia (ICA) says the industry has started working with Allan Fels, who has been appointed Emergency Services Levy (ESL) Monitor to oversee the transition.

Insurers will adjust the ESL amount that policyholders are required to pay until the property-based levy, which will be paid alongside council rates, kicks in on July 1 next year.

“ICA and its members are already working with Professor Fels… and insurers are committed to ensuring policyholders receive the full savings that flow from abolishing the ESL,” Acting CEO Karl Sullivan said.

NSW Treasurer Gladys Berejiklian says the new emergency services property levy (ESPL) will help reduce high levels of underinsurance in the state and also spread the burden of funding fire and emergency services more fairly.

“Under the proposed new system… all property owners will contribute to the cost of our essential and valued fire and emergency services through the ESPL,” she said in a first reading of the bill in Parliament.

“Abolishing the levy will reduce the cost of insurance, enabling more people and businesses to take out insurance to protect their properties from fire, floods, storms and other natural disasters.”

The existing levy is estimated to make residential insurance policies 20% more expensive and commercial policies 40% more expensive.

About 36% of NSW households have no contents insurance.

ICA research found replacing the ESL could boost the state’s revenue by $84 million.

“The entire community benefits from firefighters and the State Emergency Service, and it’s fair that all property owners should contribute financially to support them,” Mr Sullivan said.