NSW ESL legislation passes parliament

The New South Wales parliament voted to axe the Emergency Services Levy (ESL) by passing the Fire and Emergency Services Levy Bill 2017.

From July 1, the state’s firefighters and the State Emergency Service will be funded through the property-based Fire and Emergency Services Levy (FESL), rather than the ESL which is added to home building, contents, and some motor insurance premiums.

NIBA CEO Dallas Booth says the move has been a long time in the making and marks a major win for brokers as well as the industry, with advocacy for fairer insurance taxes spanning back decades.

NSW is the last mainland state to abolish the ESL, which has accounted for a 20 per cent increase in insurance premiums for NSW households, driving the cost of home and contents cover higher than any other state or territory in Australia.

Though insurers have been preparing for the transition since it was announced in December 2015, ICA CEO Rob Whelan said consumers and insurers now had greater certainty.

“The ICA welcomes confirmation that a fairer, more efficient system for funding the emergency services will start in just over three months,” Whelan said.

“No longer will the responsibility for funding these vital services be borne only by households that purchase insurance, but by the entire community. Everyone benefits from these services, and it is only fair that all homeowners contribute to their upkeep.

“Though the industry is delighted to no longer be acting a tax collector for the government, the switch has no significant financial impact on insurance companies because the ESL is ultimately paid for by policyholders, not insurers.”

Whelan said policyholders could expect to be better off overall once the new system came into effect.

“Insurers are committed to passing on all savings to their customers, and will continue to work with the Emergency Services Insurance Monitor, Professor Allan Fels, to ensure policyholders receive the full benefits. Prof. Fels oversaw the same transition in Victoria four years ago and concluded insurers passed on all savings to their customers. It will be no different in NSW.”

Recently, an insurance company had to provide refunds to customers after it removed the ESL from its policies but did not reduce its total premiums to customers.

In addition, the Emergency Services Levy Insurance Monitor has already raised concerns regarding information being given to clients by some insurance brokers.

Refer to the ESL Insurance Monitor’s website if you would like further information or seek legal advice if you are unsure what your obligations are and how to meet them.