Fire & Emergency Services Levy Deferred Indefinitely

Fire & Emergency Services Levy Deferred Indefinitely

UPDATE: 22 June 2017 – A new and necessary piece of legislation (Emergency Services Levy Bill 2017) had been issued on 22 June 2017 which required insurers to collect the FESL on their new and existing business. Royal assent has now been received and the Bill passed into law.

As a result, this may affect some insurers’ turnaround time as they will have to make adjustments in order to reintroduce the ESL rates on their premiums. For information on when your insurer will reintroduce FESL, please contact your CRM Broker on 1300 880 494.

UPDATE: 7 June 2017 – The National Insurance Brokers Association (NIBA) and Steadfast met with Treasury and Insurers to discuss the future of the Fire and Emergency Services Levy (FESL). The introduction of the new FESL potentially will be deferred for a couple of years.

The Government is committed to reintroducing the ESL on insurance policies, timing for the 1st July. Legislation will finish drafting this week, into Parliament the week of the 20th and with Royal assent by the 30th June.

There will be an ESL collection funding gap between the Government requiring ESL from the Insurers, and the Insurers ability to collect ESL given the time required systems wise. This funding gap and how it could be closed was to be taken up by Treasury with the Government.

From July 1, NSW property owners were set to be charged a new Fire and Emergency Services Levy (FESL) based on land value determined by the Valuer General, replacing the previous tax on insurance policies.

A Media Release issued on 30 May announced that the NSW Government would defer the introduction of the FESL to ensure small to medium businesses do not face an unreasonable burden in their contribution to the State’s fire and emergency services.

Ms Berejiklian said that in the majority of cases across NSW, fully insured people would be better off under the new system, however it had become clear that some fully insured businesses were facing unintended consequences.

The release goes on to say; “FSL will continue to be collected via insurance policies until the NSW Government has completed its review of the policy, and the funding requirements of fire and emergency services agencies will be met in full.”

The announcement 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. 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.

NSW would have been 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.

The full Media Release can be accessed here.

We will keep you updated as we receive further advice on the matter in the near future.

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