ICNZ slams retention of insurance-based FENZ funding model

ICNZ slams retention of insurance-based FENZ funding model | Insurance Business

ICNZ slams retention of insurance-based FENZ funding model

The Insurance Council of New Zealand (ICNZ) said it is “disappointed” with the government’s decision to continue funding Fire and Emergency New Zealand (FENZ) services through an insurance levy.

The government’s review on FENZ’s funding initially looked at an insurance-based model and a property-based model. However, the Department of Internal Affairs announced that it will retain the current insurance-based model and instead look to improve the system.

According to ICNZ chief executive Tim Grafton, the organisation will engage the government constructively on the issue and urge for greater government contribution in funding the country’s fire and emergency services.

“Continuing to tax people for a public good such as fire and emergency services is out of step internationally,” Grafton said. “The evidence shows that other countries have had no difficulty in funding these services in other ways. We disagree with the analysis that the levy is fit for purpose to fund the fire service for the future and we disagree that FENZ can’t be funded another way.”

Grafton argued that the current model is not fair, because the people who choose to insure their properties end up paying for fire and emergency services for everyone.

“It is bad for consumers, it is bad for insurers and it is bad for government,” he said. “Consumers pay more for their insurance, insurers are left to administer a complex collection service, and the government has no firm forecasts for budgeting because it depends on whether people insure or not.”

The ICNZ, Grafton said, has requested the DIA for permission to scrutinise the submissions made on the funding review and the subsequent analyses.