Brokers urged to rate the review

Brokers urged to rate the review | Insurance Business

Brokers urged to rate the review
The Insurance Brokers Association of New Zealand (IBANZ) has added its voice to those responding to the Government’s Fire Service Review document, released this week, and it is not happy.

IBANZ CEO Gary Young told Insurance Business members are now being consulted in order to formulate a submission on the association’s behalf and are also being encouraged to either write a letter backing the submission or to submit as individual members or even do both.

Young said the review was fundamentally flawed and set to fail on one key issue – the funding of the service.

He said: “IBANZ is extremely disappointed that the scope of the funding discussion is very restricted - as a result any outcome will inevitably see the continuation of a failed process.

“New Zealand will be left with an outdated, discriminatory piece of legislation imposing an unfair and inefficient tax on the responsible members of our community.”

Funding should reflect the fact that all New Zealanders need an emergency response service, he said.

“A constant criticism is that only those who take the responsible action of protecting their assets through insurance pay for the fire service. Failure to insure does not change the availability of the fire service. Thus uninsured or underinsured property owners do not make a fair contribution to the costs of the service.”

Young said the urgent need for a robust, wide ranging review of the legislation was demonstrated by the fact even the courts couldn’t agree on what it meant.

This was in reference to the Supreme Court recently overturning earlier decisions made by the High Court and the Court of Appeal over declaratory judgments sought on levy calculation issues by IBANZ and Vero.

“Current legislation must be replaced,” he said. “The temporary fix applied in 1993 has shown how ineffective fiddling with the existing Act will be. Such an approach only results in an excessively complex and bureaucratic system giving less certainty and ultimately greater costs for all concerned.

“[The courts] have recently added their voice to those highlighting the obvious shortcomings in the existing legislation. Looking at funding issues the Supreme Court acknowledged this saying it favoured ‘greater universality of the levy, which is in the nature of a tax for a public service’,” Young said.

Another concern was that the suggestions for change included in the document showed a lack of understanding of the insurance market, he said.

He added: “We have been assured this paper is a high level review and the Minister is keen to engage in a conversation on this important matter.

“IBANZ is keen to do so; our desire is to make it a truly comprehensive debate ensuring the best possible outcome for all stakeholders.”

The Minister for Internal Affairs, Peter Dunne, has been reported as dismissing insurance industry calls for funding by taxation as ‘predictable’, saying the cost to the taxpayer would be substantial if it happened.

“The reality is we’ve got a fire service funded by an insurance based model. There might be some tweaks and twists to it and some broadening of the base but fundamentally we’re not contemplating any change,” he told Radio New Zealand.

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