Policy levies aggravate under-insurance: NIBA
CoverNote, 13 March 2008
Suggested rises in fire service levies (FSL) imposed on insurance policies by some state govts only add to the problem of underinsurance, says National Insurance Brokers' Assoc (NIBA) CEO Noel Pettersen.
He said FSLs on policies in NSW and Vic could rise, based on the latest quarterly recommendations to insurers by the Insurance Council (ICA) (CN 1541,1511,1483).
An ICA spokesperson told CN the council undertook a quarterly review of FSLs to guide insurers on adjustments in levies needed to meet annual govt-imposed funding targets.He said it was up to insurers how much they increased the levies imposed in Vic, NSW and Tas to help fund fire brigade services. The latest ICA review was finalised in Feb.
Pettersen said the recommended adjustments meant FSLs applying to country Vic policyholders could rise 3% to reach 55% and those in NSW could rise 2% to 38%.
"In these tough times, such taxes further discourage policyholders from protecting themselves and their property with insurance. Now insurance buyers are again being forced to underinsure, or worse, eliminate insurance altogether."
He said taxing insurance products was "an antiquated, unfair system" that allowed those without insurance to avoid funding fire services. A longstanding ICA campaign has opposed FSLs on insurance policies, which the spokesperson said contributed about 75% of firefighting budgets.