The New Zealand government has confirmed final regulations for the Fire and Emergency New Zealand (FENZ) levy, which will take effect in July 2026.
The announcement follows a decision to limit the levy increase to 2.2%, down from an earlier proposal of 5.2%.
Internal Affairs Minister Brooke van Velden said the scaled-back levy reflects a commitment to balancing funding needs with affordability for New Zealanders.
The levy, added to insurance contracts for property, vehicles, and contents, is a primary funding mechanism for FENZ.
Van Velden stated that industry representatives had requested 18 months’ notice to prepare for the changes, prompting the government to finalise the regulations now.
“The insurance industry has requested that the regulations be finalised 18 months before coming into effect to give sufficient time to implement the new levy. I am pleased that the government has approved the regulations this month, providing confidence to businesses about how the levy will be applied and collected,” she said.
The decision also includes a directive for FENZ to find $60 million in savings over the next three years.
The savings are intended to create a financial buffer for unanticipated expenses or lower-than-expected levy revenues.
In September, the Insurance Council of New Zealand (ICNZ) supported the government’s decision to reduce the levy increase, citing the financial pressures faced by policyholders.
ICNZ chief executive Kris Faafoi noted the revised increase was a positive outcome given the current economic climate.
“We know that New Zealanders are finding it tough dealing with the cost-of-living crisis, and we support the government’s move to ensure Kiwis don’t pay anything more than they have to,” he said.
He said that while FENZ’s work is essential, the reliance on insurance levies to fund it continues to be a concern for the industry.
Faafoi also pointed out that insurance premiums are subject to multiple influences, including global reinsurance costs and government-imposed levies, which complicates efforts to keep costs manageable.
“Insurance premiums are driven by a number of factors, some of which are out of our control such as reinsurance rates and taxes and levies,” he said.
The ICNZ pledged to work with FENZ and the Department of Internal Affairs to ensure the new levy structure is introduced smoothly.
Faafoi highlighted the importance of minimising additional costs during implementation to avoid further financial strain on policyholders.
“We want to ensure the changes can be implemented easily in the time frames set down by the government and in a cost effective way that doesn’t add to the regulatory burden which will ultimately be borne by New Zealanders,” he said.
