Community polling commissioned by IAG has found only 7% of NSW voters support the current emergency services levy funding model.

The YouGov survey also found 40% of respondents would be more likely to maintain or increase their cover if the levy on premiums was removed, rising to 52% among those who described their home building insurance as insufficient.

IAG says the polling also highlights a transparency gap, with 64% of voters unaware the ESL is applied to premiums, meaning almost two-thirds of policyholders are paying a government-imposed charge without clearly understanding it is increasing the cost of cover.

Results from the polling, conducted between May 15 and 28, are included in IAG’s submission to a NSW parliamentary inquiry considering property-based levy options for a replacement funding model.

When asked how emergency services should be funded, 51% of respondents said by all taxpayers through state revenue, 19% did not know, 9% said fixed charges based on property type and 8% supported a charge added to existing council rates based on land value.

IAG says the ESL is identified in premium breakdowns on cover certificates, but customers often misinterpret the charges as discretionary fees set by insurers, which adversely affects affordability perceptions.

The submission says a replacement model should consider impacts on pensioners and vulnerable households, people in rural and disaster-prone areas and small businesses, and should recognise the distinct nature of farm businesses.

“Settings should account for the scale and structure of agricultural landholdings, with appropriate safeguards and targeted hardship support to sustain insurance participation,” IAG said.

It proposes a detailed consultation period with insurers, the regulator and others as part of transition planning, and says the switch to a new arrangement should avoid rate spikes and shortfalls.

“Compressed time frames, overlapping collection periods and sharp rate changes increase delivery risk and can lead to customer impacts, as seen in the 2017-18 reforms.”

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From the latest Insurance News magazine: Could NSW's latest bid to reform the emergency services levy go down in flames?

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