The National Insurance Brokers Association (NIBA) has urged state treasurers meeting in Canberra this week to cut premium taxes which in some cases more than double the price of insurance.

CEO Dallas Booth says levels of underinsurance and non-insurance could be dramatically lowered if premiums were not burdened by state taxes.

“People get a quote and then look at the price with the taxes on it and then they buy less insurance so they can afford to pay for it,” Mr Booth told insuranceNEWS.com.au.

“This issue is particularly timely given Australia has recently faced a series of unprecedented disasters.”

Federal Treasurer Wayne Swan, state treasurers and a host of other interested parties are meeting tomorrow and Wednesday to consider the Federal Government’s tax reform agenda.

Mr Booth says in the past 10 years several tax reviews, studies and a royal commission have “acknowledged the link between insurance taxes and the alarmingly high incidence of underinsurance and – even worse – non-insurance in the Australian community”.

State taxes on insurance premiums include stamp duty applied after GST, and in NSW, Victoria and Tasmania a levy to finance various emergency services.

According to the Federal Government’s Tax Reform Discussion Paper, state insurance taxes raised about $4.6 billion in 2009/10 and accounted for 8% of state tax revenues.

“The overall insurance tax burden is enormous,” Mr Booth said.

He acknowledges the lost revenue from any axing of state premium taxes would have to be made up from other sources.

“But NIBA does not believe that millions of Australian policyholders should also be subject to additional taxes in the form of state and territory stamp duty, and in some cases fire services levies as well,” he said.

“Double and in some cases triple taxation make the cost of insurance prohibitive.”