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Jul 2019

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New Zealand: Home insurance policyholders may get relief

Source: Asia Insurance Review | Apr 2019

Internal affairs minister Tracey Martin has announced that the government will review how Fire and Emergency New Zealand (FENZ) is funded.
 
“We’re having a look at the funding structure of FENZ to see if we can provide a stable, simple funding system that is fair to individuals and businesses.”
 
FENZ is funded by a levy on property insurance, and there are flaws in insurance-based funding:
  • Property owners that do not insure are able to ‘free ride’, as they do not pay a levy but still benefit from FENZ’s services;
  • Charging people on their insurance increases insurance costs and can reduce the incentive for them to properly insure their properties; and
  • Levy collection is complex to administer for insurers, and FENZ’s levy income may become uncertain as the commercial insurance market evolves.
 
She said that the timing is right for a review, as there is now much clearer information and understanding of the costs involved with running FENZ, which in 2017 was formed from the amalgamation of the National Rural Fire Authority and 38 rural fire districts and territorial authorities. A 
 
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