Insurers have reiterated their commitment to pass on savings related to the abolition of the emergency services levy (ESL) to clients.
Five of the largest insurers in New South Wales –
IAG,
Suncorp,
QBE,
Allianz and CommInsure – gave evidence at a public inquiry held in Sydney yesterday and explained how they are preparing for the removal of the levy in six weeks’ time.
Rob Whelan, CEO of the ICA, said that the removal of the ESL will help lower premiums and insurers will pass on “all savings attributable” to the removal of ESL to their customers.
“Normal commercial factors remain that may affect final premium prices next financial year,” Whelan said.
“For many decades this unfair and inequitable tax has added about 20% to household premiums and 30% to commercial premiums, and has penalised those property owners who have chosen to insure their assets despite the entire community being protected by firefighting and emergency services.”
Through 2016-17, approximately $785 million will go to the government from more than 100 insurance firms and brands collecting ESL from household and commercial customers.
During the inquiry, insurers explained that between 2004 and 2016, premium pricing in the NSW home and contents market rose by an average of 5.5%. The same time frame has seen an average rise in annual claims of 7.1% and a 4.5% rise in average sum insured.
The industry asked the state government to mandate a transition rate for the removal of ESL, which was not implemented leaving insurers in the predicament of having to estimate the amount of ESL they collect over the year.
The ICA provided a submission to the inquiry but was not asked to provide evidence.
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