The Fire and Emergency New Zealand Act has established a new organisation, Fire and Emergency New Zealand, the impact of which is causing widespread
disgruntlement in the insurance industry.
According to Insurance Council of New Zealand (
ICNZ) CEO
Tim Grafton, it is of key importance to ensure that property owners are aware that the levy is not an insurance increase.
“I’m sure there are many property owners that have no inkling of what the tax increase is going to be,” he said. “You do want to retain affordable and accessible insurance and having seen significant increases of this scale it is unhelpful in that respect.”
He explained that it is an increase in the tax to fund the fire service which does far more in terms of non-property protection than anything else - and that furthermore it is out of step with international practice.
“It puts the burden on people who want to insure their property and that enables people to freeload onto the system and that’s not a good thing either,” he said. “So really it should be funded from general taxation because it’s for the public good.”
Another insider who prefers to remain anonymous said that he is “perplexed” as to why people who do not insure should get the benefit while people who do insure should be penalised.
“It’s no different to other emergency services like the police or ambulances and therefore they should be grouped and taxed together, but not via insurance. I mean if a house is burning down, no-one says, hey, are you insured?” he said.
He added that insurers are starting to feel the pain as their loss ratio increases.
“Now they have to contend with a fire insurance levy increase of 40% and on top of that a 15% GST tax on a tax,” he commented.
“People take out insurance and their bill is $10,000, with $5,000 effectively constituting a government tax.”
He elaborated that when the fire service levy was removed in Australia, people increased their insurance because they realised they had been “underinsuring”.
“This increased sums insured, resulting in a positive rather than negative outcome,” he stressed.
He added that the situation has been exacerbated by an
EQC levy rise of 33% from the beginning of November 2017.
Jane Cook from Jane Cook Insurances remarked that “someone has to collect the levy and unfortunately it has fallen to the insurance industry.”
She added that it is unfair on people who do pay for insurance versus people who do not - but that it should be kept in mind that most property owners do take out insurance.
“The problem is that the moment people see a bill they will immediately think it’s an insurance hike and not a government charge,” she said.
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FENZ package prompts industry anger
FENZ – Why the race is on to comply
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