Further rises in the fire services levy (FSL) in Victoria and NSW have triggered a broadside from NIBA.

In the second increase in three months for commercial policyholders, country Victorians will now pay 55% FSL (up from 52%), while in NSW, FSL is up two percentage points to 38%.

For country Victoria this means a mark-up of 88% on their base premium, including GST and stamp duty.

Insurers providing cover in Victoria are required to contribute 75% of the annual budgets of local fire brigades.

NIBA CEO Noel Pettersen says the tax hike is contributing to underinsurance.

“In these tough times, such taxes further discourage policyholders from protecting themselves and their property with insurance,” he said.

“Now insurance-buyers are again being forced to underinsure, or worse, eliminate insurance altogether.”

QBE CEO Frank O’Halloran told analysts last month that the FSL has a huge impact on the company’s bottom line and its expense ratio in Australia.

Calling the levy “just quite ridiculous”, he added: “Obviously it’s a big subject for us, and it’s a big subject for the industry, in trying to convince governments to really make it a tax that’s imposed on all property owners.

“It seems unfair to us that we have a situation where the ones that take out insurance and fully insure are the ones that have to pay for the running of the fire brigades in certain states.”