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The NSW emergency services levy will be cut from home insurance premiums as the state’s Premier Chris Minns looks to provide cost-of-living relief.
Mr Minns said the change would see an overhaul of the funding for the state’s emergency services, which receive a significant portion of their budget from the levy that is added to home insurance policies.
The government said that approximately 17 per cent of households do not have home or content insurance due to rising cost-of-living pressures and expensive policies, instead “risking great loss during a natural disaster because of unaffordable premiums”.
In a statement, Mr Minns said: “Reforming the emergency services levy is not easy, but it’s the right thing to do.
“For too long this has been in the too-hard basket for NSW.
“But as we face the threat of more natural disasters, we have a significant opportunity to make the system fairer, more sustainable for the future.”
The government said that NSW Treasurer Daniel Mookhey would meet with stakeholders in the industry to discuss the levy’s reform and issue a discussion paper as part of the consultation process.
Mr Mookhey stated: “Far too many home owners run the risk of leaving their biggest asset uninsured because of soaring costs.
“The NSW government will begin consultation across industry and the wider industry and the wider community. It’s not a reform that can be rushed – it’s too important.”
After the state government’s announcement, Insurance Council of Australia chief executive Andrew Hall said it was positive news for “anyone who takes out insurance”.
He added: “Reforming the ESL (emergency services levy) will be a major win for insurance affordability in New South Wales, an issue that is being discussed around kitchen tables and small businesses around the state.
“The ESL is a poorly designed and inefficient tax that numerous previous inquiries have said should be abolished and we congratulate Premier Minns, Treasurer Mookhey, and emergency services minister Dib for their announcement.”
The proposed levy reform came after several major banks proposed that more needed to be done to ensure appropriate insurance cover is maintained on mortgaged property to protect borrowers and the financial system.
In July, NAB group chief risk officer Shaun Dooley stated that the cost of insurance was an emerging challenge as it impacted the affordability for borrowers who must maintain a level of coverage.
Mr Dooley commented: “We need to continue to work with customers and insurance partners on how we’re going to deal with this issue both in the short term, but also from a strategic perspective.”
[Related: Majors flag ‘emerging challenge’ facing mortgaged property]
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