NIBA Media Release, 15 May 2009

A discussion paper demonstrating how high state government taxes on insurance impact on ordinary Australians is being sent by insurance brokers to their clients across New South Wales and Victoria.

 

Produced by the National Insurance Brokers Association (NIBA), the discussion paper compares the two states’ tax policies with those of other states to show how insurance-buyers are being disadvantaged. It also contains an international comparison to support its contention that Victoria is the highest-taxing state in the world when it comes to insurance, with New South Wales a close second.

 

“We are trying to show insurance-buyers that high levels of tax on insurance are a major disincentive to insure,” NIBA Chief Executive Noel Pettersen said. “We also demonstrate in the paper how New South Wales and Victoria are using taxes on premiums to pay for emergency services that the entire community should be paying for.”

 

Mr Pettersen said the recent Victorian bushfires had revealed that up to a third of the destroyed homes had no insurance or were underinsured. The industry believed affordability is a factor.

 

“When up to half the cost of insurance is going in tax, you’re going to always have an affordability problem.”

 

He said the reduction of taxes will only come when the community demands it.

 

“It’s up to us as insurance brokers to provide the evidence that triple-level taxes on insurance are discriminatory and unnecessary,” he said. “Insurance is being taxed at the same level or higher than alcohol, tobacco and gambling, and if we don’t push for change it’s just going to get worse and worse.”

 

He said other states have already switched to a fire services levy system based on property taxes, which has resulted in much lower insurance premiums.

 

“But New South Wales and Victoria continue to load down premiums with increasing levels of tax. And they’ll continue to grab as much as they possibly can until the community tells them to stop.”

 

Copies of the NIBA tax discussion paper can be downloaded at www.niba.com.au/tax.

 

 

For media comment or further information, please contact Noel Pettersen on 02 9459 4305.

 

NIBA is an independent industry association representing 500 firms and more than 2600 intermediaries, who handle almost 90% of the commercial insurance transacted in Australia. Brokers play a major role in insurance distribution, handling $10 billion in premiums annually and placing around half of Australia’s total insurance business.