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The Insurance Council of Australia (ICA) has welcomed NSW budget, but has raised concerns that the amount of revenue that the Berejiklian government expects to raise from insurance taxes and levies will continue to place an unfair burden on NSW policyholders.
“Revenue from insurance stamp duties and the Emergency Services Levy (ESL) will soar by 5.4% a year over the next four years, reaping $8.6 billion, compared with annual inflation of 1.3%,” ICA CEO Rob Whelan said. “The budget shows continued over-reliance on both the ESL and stamp duties, which numerous reports and inquiries have concluded are unfair, inefficient, and inequitable.”
From July 01, NSW households will typically be paying more than 50% in taxes on insurance (GST, plus 9% stamp duty, plus the ESL) on renewals and new policies, raising typical household premiums by $60-$100 this year.
ICA said the reform will hit many small businesses and primary producers the hardest, as they will have to pay up to 70% in taxes on their insurance policies.
“The ICA urges the government to restart the ESL reform process, which was abandoned in May 2017, in consultation with the insurance industry, independent tax experts, local government, small business, and other key stakeholders,” Whelan said.
ICA said stamp duties and the ESL are a significant cause of non-insurance and underinsurance in the community, with more than 848,000 NSW families (about 30%) without household (home or contents) insurance – Australia’s second-worst non-insurance rate after the NT.
“The ICA and its members would welcome consultation on an all-of-government approach to removing unfair taxes and levies on insurance and ensuring fairer taxation models are designed and implemented,” Whelan said.
