Insurance companies disappointed with NSW FESL delay

The announcement that NSW FESL is indefinitely delayed has significant legal and commercial implications for the industry but has come without consultation with insurers says Insurance Council of Australia (ICA) spokesperson Campbell Fuller.

“Insurance companies are shocked and disappointed with the Government’s decision to delay the introduction of the Fire and Emergency Services Levy (FESL) on properties. The decision is a blow to New South Wales property owners, households, businesses and the broader state economy. The ESL will continue to deter the community from taking out the insurance we all need,” Fuller said.

The announcement means that insurance companies are now required to continue collecting the old Emergency Services Levy (ESL) beyond June 30, for an unspecified portion of the 2017-18 financial year. ICA has expressed concerns that no deadline has been set for recommencement of the reform.

“It is a logistical and technical challenge that will cause confusion and increase premiums for policyholders. The resumption of ESL collection will come with significant additional costs that the industry will be forced to pass on in full to policyholders,” Fuller said.

Insurers have spent more than a year and tens of millions of dollars on consultants and technological system changes in preparation for the removal of the ESL from June 30. They have worked without the certainty of legislation, which was only passed in March.

“The NSW Government has had more than 18 months to design and implement its new FESL system. Every other mainland state has abolished emergency services levies on insurance with little fuss. The government’s failure to introduce its FESL on time calls into question the notion that emergency services should be funded separately rather than through consolidated revenue,” Fuller continued.