The Insurance Council of Australia (ICA) has welcomed the government of New South Wales' (NSW) renewed commitment to reforming the Emergency Services Levy (ESL).
NSW is presently the only mainland Australian state to fund emergency services by taxing insurance customers and budget numbers set out the case for the ESL’s abolition.
The average ESL paid by home insurance customers in the last financial year was around A$285 ($185) per policy, but it varies considerably, with insured property owners at median land value paying A$107 to A$461 in ESL each year.
This spread in tax paid on the same land value is the result of properties’ location, exposure to extreme weather risks, level of insurance and replacement value.
Without reform, policyholders in NSW are forecast to pay A$5.6bn in ESL.
The ICA welcomed the allocation by the NSW government, in partnership with the federal government, of A$4.2bn to support recovery efforts, including A$63m to open land for safe residential development and support relocations in the Northern Rivers.
NSW and Queensland are home to the majority of the 300,000 properties across the country that face an extreme or severe risk of flooding, making investments in risk reduction welcome and timely.
Both governments expect combined revenue of more than A$21bn from insurance-based taxes, with both states forecast to collect almost A$8bn each in insurance stamp duty.
The removal of these taxes on household and business insurance is the most immediate way to reduce insurance premiums.
The ICA also welcomed the Queensland government’s ongoing commitment to progress the 2023 Compulsory Third Party Insurance Scheme Review to ensure the sustainability of the scheme.
Said ICA deputy CEO Kylie Macfarlane, “The insurance industry welcomes the New South Wales and Queensland governments’ investments in disaster mitigation that will uplift protections for communities facing extreme weather.”
Ms Macfarlane said, “With insured losses already exceeding A$1.5bn this year and four major flood events across both states so far, every dollar toward risk reduction will help to reduce losses and deliver better resilience.”