Insurance industry bodies still adding fuel to the levy fire

by Maryvonne Gray 25 Sep 2015

Insurance industry bodies still adding fuel to the levy fire

Internal affairs minister Peter Dunne announced this week that New Zealand is very likely to get a new, national fire service – but how it will be funded is still to be revealed.

Back in May, the Insurance Council of New Zealand (ICNZ) expressed dismay at how similar the suggested options were to the existing funding model.

At the time CEO Tim Grafton slammed the alternative options as ‘narrow’ saying they had effectively shut down ‘free and frank public discussion about the best way to fund New Zealand’s fire services’.

This week Gary Young, CEO of the Insurance Brokers Association of New Zealand (IBANZ), attended a workshop put on by the Department of Internal Affairs to hear Minister Dunne give an update.

However, he was informed there would be no update on the funding aspect.

“The Department of Internal Affairs is still working on this and we are talking to them about various issues,” Young told Insurance Business.

“Ultimately we would hope that whatever structure comes out of this review it is the most efficient possible. Given that only those in the community who take out insurance carry the cost it is incumbent on the government to minimise that cost.”

He added: “We are concerned that the current funding system is not replaced by new complex processes which will only further add to the burden of those who have taken the responsible course of insuring their assets.”

Grafton said while ICNZ firmly believed that the levy should be taken off insurance and moved to taxation, it was still set on lobbying the Government as hard as possible to make the suggested options work in as fair a way as possible.

“We want the Government to accept the need to remove the levy off motor insurance and to provide a greater contribution to funding the fire service than it currently does, reflecting the benefits it receives as well as the significant non-fire component to the service’s work,” he said.

“We also want to see a simpler, less costly compliance system that minimises avoidance of levy payments.”

Dunne was reported as saying that the new service would cost ‘broadly’ the same as the current system and could not comment on whether people would see their insurance costs would rise.

“I think that is probably unlikely, but quite what the structure will be depends on just where the financial discussions – which are pretty close to being concluded – settle.”

Read more about the ongoing fire levy issues here.