Fire and Emergency New Zealand will raise its insurance levy rate by 2.2% from July 2026, instead of 5.2% as proposed in a public consultation.

Internal Affairs Minister Brooke van Velden announced the decision last week after the service was asked to reconsider its increase for the three years to June 30 2029.

“I was not convinced that such an increase is justified and requested a solution from FENZ, which would ensure continuity of services while managing levy revenue responsibly,” Ms van Velden said.

“I am pleased to announce … that the rate of levy increase has been revised down to 2.2%. I am assured that this will sufficiently fund FENZ to carry out the essential front-line work it does keeping New Zealand communities safe, while mitigating the impact on levy payers – Kiwi households and businesses.”

The levy is added to any insurance contract that covers property for fire loss or damage, including cars, homes and contents, and non-residential property.

Ms van Velden says the government has also decided on a $NZ25 ($22.88) charge to vehicle insurance after the fire service consulted on a flat $NZ40.12 ($36.72) fee.

“While acknowledging increasing costs is difficult for Kiwi motorists, fairly apportioning costs to the rate of incidence was a message that came through strongly from the public during consultation,” she said. “This change ... means the rate will now go some way to better reflect the number of motor vehicle incidents and the overall cost to FENZ’s response.”

New Zealand insurers have welcomed the announcement.

“We know that New Zealanders are finding it tough dealing with the cost-of-living crisis and we support the government’s move to ensure Kiwis don’t pay anything more than they have to,” Insurance Council of New Zealand CEO Kris Faafoi said.

“The government has struck the right balance between FENZ having the appropriate resources to do their job while ensuring the funding via insurance premiums is affordable and sustainable.”

Ms van Velden say she has asked the fire service to deliver savings of $NZ60 million ($54 million) by the end of the three-year levy period, to “provide a reserve for significant unexpected costs or undercollection of the levy”.