Insurers must shoulder a portion of the $47.3 million special levy to shore up the Compensation Scheme of Last Resort, which has suffered a blowout in Australian Financial Complaints Authority unpaid determinations.

The scheme does not cover general and life insurance complaints, and general insurers have said they should not be forced to contribute to the levy.

Financial Services Minister Daniel Mulino, who announced the special levy last week, says the charge “will be applied broadly to reduce the burden on any one subsector and to ensure of the sustainability of individual subsectors and the CSLR as whole.

“That’s a reflection of the fact that all of those subsectors benefit from there being confidence in the financial services sector and appropriate consumer protection. It’s also a reflection of the fact that we need to allocate that broadly in order that it’s not overly burdensome on any particular subsector.”

Scheme legislation states it can collect a maximum of $20 million annually from a contributing financial subsector, but a special levy can be imposed if the need arises. The special levy can be spread across several subsectors under an option called cross-subsidisation.

According to a Treasury fact sheet, insurance product providers will pay 5.5% of the special levy, or $2.59 million.

The industry is one of 23 retail-facing subsectors listed in the fact sheet.

Claims handling and settling services providers have been slugged 3.4% ($1.59 million); licensees that provide only general advice to retail or wholesale clients 1.4% ($645,887); insurance product distributors 0.4% ($194,462); and risk management product providers 0.05% ($23,147).

The Finance Industry Council of Australia, whose members include the Insurance Council of Australia and Council of Australian Life Insurers, said: “Without urgent reform, consumers will continue to pay for growing flow-on costs associated with propping up the scheme by entities unrelated to the financial misconduct.

“Consulting on reform options to ensure the CSLR is fair and sustainable in 2026 must be progressed as a priority, ahead of any discussions on managing the 2027 excess.”