Insurance policyholders in New South Wales (NSW) are dealing with a considerable financial strain, as highlighted by recent data from the Insurance Council of Australia (ICA).
The data indicated that NSW residents are paying an additional average fee of $305 on home and contents policies to fund the Emergency Services Levy (ESL), a charge not applicable to residents in other Australian states.
The ICA’s findings were submitted to the New South Wales Treasury in the context of the government’s initiative to eliminate the ESL, a move announced by the Minns Government.
The analysis of insurance pricing data revealed that the ESL adds an average of $252 per year to home and contents policies, $633 to commercial building and contents policies, and $922 to commercial building policies.
When factoring in the additional costs of GST and stamp duty, the total extra cost due to the ESL increases to $305 for home and contents policies, $766 for commercial building and contents policies, and $1,200 for commercial building policies.
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The ICA’s analysis outlined that the design of the ESL places a disproportionate financial burden on those least able to afford it and does not accurately align with the potential need for emergency services.
The ICA has expressed support for the proposed tax reform, viewing it as a chance to introduce more equitable funding methods.
“The Insurance Council commends the Minns Government’s decision to abolish the ESL and find a fairer way to fund emergency services and a more equitable system for all,” said ICA chief operating officer Kylie Macfarlane. “This decision is a major win for insurance affordability in the state.”
Macfarlane added that the new data underscores the significant impact of the ESL on policyholders and their ability to secure adequate coverage.
“The removal of the ESL will significantly enhance insurance affordability, encouraging more families and businesses to secure cover for their most valuable assets and be protected when the unexpected occurs,” she said. “We commend New South Wales Treasurer Daniel Mookhey for leading the discussion to replace the ESL, and we look forward to continued involvement in this important reform.”
The ICA also recently welcomed the additional funding in the 2024-25 Budget, aimed at improving the country’s natural disaster resilience. It is calling for comprehensive climate assurance standards to enhance comparability between reporting entities and help Australia meet its emission reduction objectives.
