NIBA welcomes NSW Government ESL reform
The National Insurance Brokers Association (NIBA) has welcomed the NSW Government’s announcement today on plans to ditch the current insurance-funded emergency services levy (ESL).
“This is a major reform to address serious inequities that unnecessarily drive up layers of costs to insurance premiums in NSW,” NIBA CEO Phil Kewin told insuranceNEWS.com.au.
“Insurance brokers are uniquely placed to provide valuable input. We congratulate the Minns Government and look forward to working together to find a more equitable solution for the people of NSW.”
The current ESL model penalises responsible home and business owners who invest in insurance to protect their assets, and NIBA has consistently highlighted the need to rectify the imbalance and create a system that incentivises responsible risk management practices and increases insurance affordability, Mr Kewin says.
NSW is the only mainland state that uses a levy on insurance to fund emergency services, and under the existing model policyholders contribute 73.7%, local councils 11.7% and the state government 14.6%.
“Reforming the Emergency Services Levy is not easy, but it’s the right thing to do,” Premier Chris Minns said this morning, as reported in a Breaking News bulletin.
“For too long this has been in the too hard basket for NSW. But as we face the threat of more natural disasters, we have a significant opportunity to make the system fairer, more sustainable for the future.”
The NSW Berejiklian Government backflipped in June 2017 on plans to ditch the levy after a business backlash to their alternative proposals.
Labor’s proposed reforms will be revenue neutral and will not be the same as a model previously put forward by the former Coalition Government, the statement today says.
The Treasurer will lead consultations with industry and stakeholders on the new reforms, including issuing a discussion paper in coming months.
The Insurance Council of Australia, which has long campaigned for an end to the levy, has congratulated the Government for its decision to reform the ESL.
“Today’s announcement to reform the ESL and find a fairer and more equitable way to fund emergency services is great news for anyone who takes out insurance in Australia’s largest state,” CEO Andrew Hall said.
“It clearly demonstrates the Minns Government understands the impact of this tax on the state’s capacity to recover from extreme weather events, like last year’s record-breaking floods.”
Business NSW, the state’s peak business organisation representing almost 50,000 businesses, has also welcomed proposed ESL changes which it says if executed would significantly reduce the cost of premiums.
“This proposal by Premier Chris Minns would give business owners more certainty. Removing it completely – which could reduce business insurance premiums by an average of 30% – would bring us into line with all other Australian jurisdictions,” CEO Daniel Hunter said.
“This is the first good news we’ve had on insurance premiums for a very long time.”