Brought to you by:

Pricing watchdog to monitor NSW insurance levy shift 

The NSW pricing tribunal will monitor premiums during the proposed move away from the emergency services levy, to ensure insurers are not overcharging.

State Treasurer Daniel Mookhey says legislation introduced to state parliament will establish the Independent Pricing and Regulatory Tribunal (IPART) as the body responsible for ensuring levy savings are passed on to policyholders.

“IPART is an independent, well-regarded government agency that has core price-monitoring functions and executives with extensive insurance industry experience,” he said.

The monitor will have power to seek penalties of up to $10 million for prohibited conduct and may hold public inquiries and publish statements identifying insurers that have breached rules or overcharged in relation to the levy.

IPART will begin by determining a premium baseline for future comparison, with the bill giving it power to collect data from the industry.

Mr Mookhey says the government is yet to commit to a transitional path or timing for the removal of the levy, and a public consultation remains open until Wednesday next week. The proposed replacement arrangement would see funding spread across property owners.

“This new contribution regime will seek to create a fairer, simpler, more efficient and more sustainable system to fund our emergency services,” he said. “The need for critical reform is now more pressing than ever, with climate change and the growing instances of natural disasters.”

The emergency services levy increases premiums by about 18% for residential property cover and 34% for commercial property, contributing to more underinsurance in NSW than in other states, the government says. For the 2024-25 financial year, the levy will collect about $1.3 billion, which will largely be passed on by insurers to policyholders through premiums. 

IPART will provide publicly released quarterly insurance monitor reports to the government.

The Insurance Council of Australia says the industry is committed to passing on savings from the abolition of the levy, and supports transparency.

“This bill and progress to date aligns with the Insurance Council of Australia's long-term advocacy to find a fairer and more equitable way to fund emergency services in NSW,” it says on LinkedIn.

The previous Coalition state government appointed Allan Fels as levy monitor under its plan to remove the charge on insurance. That reform plan was ditched in 2017, but the monitor’s office continued until 2020.