NIBA meets with the office of The Hon. Damien Tudhope

Last week, NIBA CEO Phil Kewin, along with NIBA Directors Rebecca Wilson and Tim Wedlock, met with the office of The Hon. Damien Tudehope, the NSW Minister for Finance and Small Business to discuss the current status of the NSW Emergency Services Levy (ESL), as well as the implementation of the IPART recommendations in relation to the Home Building Compensation Fund (HBCF).

NIBA has been a vocal advocate for reform of the current NSW emergency services funding model since the abolition of the ESL was postponed in 2017. NIBA has previously engaged with the Minister’s Office to advocate for a review of the current model, as well as more immediate changes to the way the levy is collected when insurance brokers place NSW risks with foreign insurers.

NSW is the only state to fund its emergency services through a levy on insurance companies, which is ultimately passed on to policyholders. Tasmania, which uses a similar model is in the process of reviewing the model with a view to transitioning to a more equitable property-based levy.

NIBA has previously raised the inequities that exist within the current NSW model, including that not all those who benefit are required to contribute to the funding of the emergency services, as the levy only applies to those who take out insurance, excluding alternative risk financing mechanisms, such as mutual pools and captive insurance. The levy is then passed onto all insurance policyholders, increasing the cost of their insurance premiums which is compounded by the addition of GST and stamp duty.

While NIBA continues to advocate for wholesale reform of the emergency services funding model, in the interim, a more urgent component and the primary topic of conversation was the calculation of the levy in relation to international placements by brokers. The complicated nature of calculating these payments makes it difficult for brokers to accurately calculate the correct amount of ESL that needs to be collected and remitted to the NSW Government, leaving brokers to make up the arrears in the event of under-collection. NIBA’s proposal is to introduce a forward rate based on averaging to give brokers and their clients more financial certainty.

An additional meeting topic related to the implementation of IPART recommendations to make the use of brokers optional for applying for and attaining home warranty insurance, under the Home Building Compensation Fund administered by icare. This is a very specialised area and the Minister’s Office and icare have agreed to close consultation over the course of the next 12 to 18 months as the proposed changes are being implemented.