Home / Regulatory & Government / Levy rise to hit NSW premiums
1 June 2020
An increase of more than 20% in the NSW Emergency Services Levy (ESL) will have a dramatic effect on premiums this coming financial year, an insurer has warned.
As insuranceNEWS.com.au has reported, NSW Treasurer Dominic Perrottet has confirmed an ESL collection target of just short of $1.09 billion for the 2020/21 financial year.
FM Global says it estimates that to meet this requirement “a rate of 37% will need to be applied to all assessable NSW premium effective June 30”.
“The rate will be reviewed periodically and may vary in future in response to revised Brigade budget expectations, revised industry insurance premium pool estimates, and other factors arising from the NSW government’s decision to reinstate the insurer ESL,” the insurer says.
The levy was due to be abolished before a sudden u-turn in 2017 which left insurers fuming. NSW is now the only mainland state that still funds its emergency services through a levy on insurance.
The Insurance Council of Australia says the levy and other insurance taxes contribute to a high level of underinsurance in the state and has called for the NSW Government to revisit reform.
It says the levy rise is “a severe and unnecessary blow” to householders and businesses in the current economic climate.
Councils also contribute to the levy, but the NSW Government says it will pay for the councils’ share of the increase this year.
ICA says this shows that change is possible.
“The NSW Government should commit to abolishing the ESL on insurance,” spokesman Campbell Fuller said. “Its decision to assist councils suggests the Government has scope to recommit to the ESL reform agenda.”
insuranceNEWS.com.au has also reported that the ESL Monitor’s office will close on June 30.
Insurers believe Monitor Allan Fels’ position should have been abolished once the levy removal was abandoned. His original role was to make sure insurers passed savings to consumers as the levy was taken off premiums.
It has emerged that Professor Fels has launched “a major investigation” into a top-four insurance company “due to possible prohibited conduct”.
Two more of the Monitor’s quarterly reports are yet to be published and further details of the probe are expected to be included in these reports, along with a summary of findings following consultation on the way the controversial levy is calculated and collected.