Taxes on general insurance in South Australia add about 20% to premiums, the National Insurance Brokers Association (NIBA) says.

“Insurance taxes must be reformed – they are inefficient, inequitable… and contribute to levels of underinsurance in the community,” CEO Dallas Booth says in a submission to a state tax review.

Levies on insurance add about $500 million a year to the state’s coffers, according to the review discussion paper released in February.

NIBA says insurance companies pass on the cost of all taxes, so it is policyholders who are affected.

A range of covers are taxed in SA, including an 11% charge on general and compulsory third party (CTP) premiums, a 1.5% tax on life insurance and an annual levy of $60 on CTP renewal notices.

Insurance taxes are expected to contribute about $445 million, or 10%, of SA’s tax revenue this financial year.

NIBA says general insurance is 20% more expensive than it would be without the GST and stamp duty.

“This is a substantial additional burden imposed on policyholders, and has a direct impact on the affordability of cover.”

It says every major review of insurance taxes – including the HIH Royal Commission, the Henry review and the Financial System Inquiry – has called for reform, and for stamp duty and fire services levies to be abolished.

It urges the state to seek expert advice on options for alternative revenue streams.

SA Premier Jay Weatherill has said the State Government is open to radical reform of its tax system.