Insurer gives enforceable undertaking over FSL funds

Insurer gives enforceable undertaking over FSL funds | Insurance Business

Insurer gives enforceable undertaking over FSL funds
Victoria's Fire Services Levy Monitor Professor Allan Fels announced yesterday that an enforceable undertaking from insurer CGU had been accepted, following an investigation into the FSL over-collection.

CGU previously paid $1.184m to Victoria's Country Fire Authority in March 2014 and $210,000 to a consumer organisaiton, instead of refunding the over-collected funds to customers. The undertaking acknowledges the payment to consumers would have been impractical.

“The Monitor has acknowledged CGU’s claim that its average over-collection of FSL was approximately $8.80, the majority of which was collected through brokers, and accepts that it was uncommercial and infeasible for CGU to return these small sums of over-collected FSL to its customers," a statement from the Monitor read.

“Given that refunds were impractical and the payment to the CFA had already been made, we accepted that the payment made to the CFA should stand.

CGU will also need to withdraw a media release that it issued on 3 March 2014 announcing that it had donated $1.184m in surplus FSL collections to the CFA, and to refrain from referring to the payment as a donation at all.

The Monitor said the enforceable undertaking completed the resolution of all over-collected FSL involving 56 insurers.

Over-collection of the insurance-based levy occurred where the amount of FSL an insurer obtained from property insurance policyholders in 2012–13 exceeded the amount the insurer was required by law to contribute to funding Victoria’s fire services. Over-collection occurred because insurers had to estimate the amount of FSL they were required to collect from policyholders for the financial year 2012–13.