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22 May 2013
The Victorian Government will not introduce the legislation to abolish the state’s fire services levy (FSL) until the next sitting of the state’s parliament in mid-August.
The delay was expected by the insurance industry, which had seen no signs of the legislation being introduced to start on July 1, and Parliament last week went into recess until August 14.
The delay will not affect insurers’ plans to raise the FSL in its final year before all property holders are levied to fund the country and metropolitan fire brigades.
However, there are reports that some insurers are using the delay to try to secure a competitive advantage.
Some have not yet announced their transitional arrangements, and insuranceNEWS.com.au understands that others have informed brokers they will write longer-term policies for Victorian risk and will allow some policy extensions.
Some insurers have been acting to prevent insureds cancelling policies early or extending to avoid double taxation.
Policyholders will be charged a full year’s FSL on policies written from next Saturday, July 1. After that, policies carrying the FSL could overlap with the introduction of the property-based levy on July 1 next year.
A Victorian Government spokesman says legislation giving effect to the switch from the FSL to a property-based tax will be introduced into State Parliament as soon as possible.
“An announcement about FSL reform, including how transitional impacts will be managed, will be made soon,” she told insuranceNEWS.com.au.
She says the Government has consulted widely on the design features that should underpin the move.
“The Government is working with industry to ensure the FSL is administered fairly during this period.
“Reform of the FSL is a significant economic initiative that has broad stakeholder impacts. These transitional impacts require careful consideration.”
Zurich is the latest insurer to tell brokers it will no longer refund the FSL component of cancelled policies, effective from July 31. From July 1 it will not write short or long term policies for Victorian risks.
Vero has also announced it is raising FSL rates by 10 percentage points, from 85% to 95% for country commercial policyholders and from 44% to 54% for metropolitan clients. It will also not refund the FSL on cancelled policies. The changes take effect on July 1.
Policyholders outside metropolitan Melbourne have keenly anticipated the removal of the FSL because they are facing a levy of 95% on top of their premiums to fund extra investment in the Country Fire Authority.
The Victorian Farmers Federation (VFF) says the State Government has left more than 2 million farmers, businesses and households “in limbo” after failing to meet its promise to phase out the levy from July 1.
VFF President Peter Tuohey says for every $1000 of insurance premium, a farmer must pay FSL of $850 to $950 plus GST and stamp duty.
“We’re sick of paying this unfair levy on our insurance, while those who don’t insure or underinsure get a free ride,” he said.
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