Insurers are moving as quickly as they can to reinstate Emergency Service Levy

Updates from Insurers on the collection of ESL

Insurers are moving as quickly as they can to reinstate the collection of the emergency services levy (ESL) on insurance premiums for property located in NSW. This is taking some time, as the government’s decision to defer the property levy was unexpected by the Industry.

For the FY18 year, the ESL apportioned to insurers will be $794m, up from $785m in the FY17 year. Insurers may choose to “amortise” the FY18 and FY19 ESL allocation across 2 years, avoiding potential significant ESL loading for the FY18 year (given insurers are needing to collect 12 months ESL in a potentially shortened period due to changing systems.)

It appears there will not be a common date for the new ESL charges across the industry, as each insurer is dealing with system changes in their own way. CRM Brokers have been provided the following announcements:

AIG/QUS will recommence collection of ESL on all relevant NSW new and existing business incepting from 1 August 2017 that are quoted or offered QUS from 12th of July. The following ESL rates are confirmed to apply;

 Product Class Rate effective
Commercial 36%
Residential 20%

 

Allianz will reinstate ESL rates on new and existing business from 1 August 2017. The following rates have now been confirmed and will be reinstated onto applicable products from this date.

 Product Class Rate effective
Fire / Industrial Special Risk / Consequential Loss / Commercial Strata 36%
Construction / Erection Risks / Mobile Plant and Equipment 36%
Residential Strata 19%
Home / Landlords 19%
Private Motor Vehicle / Caravan and Trailer / Motorcycle 1%
Commercial Motor and Fleet 1%

 

CGU: CGU will reinstate ESL rates on new and existing business from 12 August 2017. The following table includes the confirmed ESL rates that will be reinstated onto applicable policies from 12 August 2017.

Insurance Class ESL Rate
Home 18.5%
Fire & ISR 28.0%
Motor 1.0%
Personal Valuables/Personal Property 3.7%

On 15th of September, CGU advised that ESL rates for new business and renewals will be changing again effective from 1 November 2017.

Insurance Class ESL Rate
Home 19.5%
Fire & ISR 35.0%
Motor 1.0% – No Change
Personal Valuables/Personal Property 3.7% – No Change

 

CHU: CHU will now reinstate the Emergency Services Levy on new business, renewals and endorsements with an effective date commencing from the 15th August 2017 at the rates shown in the table below.

 Product Class Rate effective from the 15th August 2017 
Commercial property 36.5%
Domestic property 20%
Valuables 4%

 

QBE Insurance will reinstate Emergency Services Levy on new and existing applicable policies. We will be progressively implementing these rates from 12 August 2017.

 Product Class Rate effective from the 12th August 2017 
Commercial property 36.5%
Domestic property 20%
Valuables 4%
Motor 1%

 

Vero will recommence collection of ESL across a roll-out period starting from 19th of August. Actual effective date differs by product and will be completed within the roll-out period of both new business and renewals.

 Product Class ESL Rate and Effective Roll-out Period
Fire / ISR Consequential Loss / Commercial Strata 38% from 30th August 2017
Construction / Erection Risks / Mobile Plant Equipment 38% from 30th August 2017
Residential Strata 23% from 30th August 2017
Home/Landlord 23% effective between 19th of August to 1st of September 2017
Personal Valuables 3% effective between 19th of August to 1st of September 2017
Private Motor / Caravan and Trailer / Motor Cycle 1% effective between 19th of August to 1st of September 2017
Commercial Motor and Fleet 1% from 30th August 2017

 

Zurich Australian Insurance Limited (Zurich) will again be collecting the FESL on new policies and policy renewals where insurance coverage is provided in NSW with an effective policy date from 15 August 2017, at the following rates.

 Product Class FESL Rate
Commercial Property 36%
Residential Property 20%
Motor 1%

 

The remaining Insurers are finalising their plans for the reinstatement of the ESL, and are expected to announce implementation dates in the near future. CRM Brokers will continue to provide further information as it comes to hand.