Insurance brokers across New Zealand are preparing clients for a structural overhaul of the Fire and Emergency New Zealand (FENZ) levy, which comes into force July 1, 2026. The redesigned framework alters the mechanics of how levies are calculated – not just the rates – meaning the financial outcome for individual policyholders will depend heavily on asset classification, policy structure, and the gap between indemnity values and current sums insured. Howden, Rothbury, and Aon have each released client-facing material in recent months laying out the scope of the changes. The new rules apply to policies incepting or renewing on or after July 1, 2026. Policies mid-term before that date remain under the existing levy rules until they expire, though a midterm endorsement that triggers a new policy on or after July 1 may bring the new rules into effect earlier.
New Zealand’s fire services have been funded through insurance levies since the 1970s. The current round of changes covers the three-year period from July 1, 2026, to June 30, 2029, and followed a public consultation period that ran from April to May 2024. FENZ received 841 submissions during that process – more than any previous levy consultation. The initial proposal put to government sought a 5.2% increase in total levy revenue. Minister of Internal Affairs Brooke van Velden pushed back, ultimately settling on a 2.2% increase. A proposed flat vehicle charge of $40.12 per vehicle was also brought down to $25 before the rates were confirmed. “I was not convinced that such an increase is justified and requested a solution from FENZ which would ensure continuity of services, while managing levy revenue responsibly,” van Velden said in September 2024. Van Velden also directed FENZ to deliver $60 million in savings over the three-year levy period, describing the instruction as part of a broader government focus on extracting value from public spending.
The mechanics of the commercial property levy are changing in a way that brokers say requires careful analysis at the individual client level. Under the existing framework, non-residential property levies are assessed against indemnity or depreciated values. From July 1, the levy base moves to the replacement sum insured on the policy schedule. To offset this, the non-residential rate drops from 0.1195% to 0.0776% – roughly 65% of the previous figure. There is no dwelling cap for commercial property, and the levy has no ceiling regardless of asset value. The practical issue for brokers is that the rate reduction does not automatically translate to a lower levy. Where a property's sum insured is substantially higher than its indemnity value – which is common in a high-inflation building cost environment – the expanded levy base can produce a larger levy despite the lower rate. Each client’s position will need to be modelled individually.
Howden’s guidance to clients notes the importance of reviewing whether levies were previously assessed on indemnity values and running numbers against current sums insured before renewal. Buildings where the residential floor area is 50% or more retain the residential treatment, with a rate of 0.1074% and a per-dwelling cap that moves from $119.50 to $107.40. For mixed-use buildings where the residential component falls below the 50% threshold, the full non-residential rate applies with no cap – unless the owner provides a registered valuation to split the sum insured between the two uses. Where such a valuation is supplied, the levy is the lesser of two figures: a blended calculation using the residential rate on the residential portion and the non-residential rate on the commercial portion, or the non-residential rate applied to the full sum insured. Brokers working with body corporate and mixed-use property clients should assess whether a valuation apportionment is worth pursuing on a case-by-case basis.
The motor vehicle levy is moving away from a structure based on vehicle weight and insured value to a uniform $25 per vehicle, per year. Previously, light vehicles under 3.5 tonnes attracted a $9.53 levy, while heavier vehicles were charged at 0.1195% of sum insured – a figure that could reach hundreds of dollars per unit for high-value equipment. The $25 flat fee applies across all insured motor vehicles, including motorcycles, trailers specified on a policy, and – for the first time – vehicles insured under third-party only cover. Brokers will need to ensure TPO clients are aware they will now carry a levy obligation that did not previously exist.
The fleet-level effect is asymmetric. Light vehicle-heavy fleets will see levy costs rise, while operators running large or high-value heavy vehicles stand to benefit. To illustrate the contrast, Rothbury’s published guidance cites a 30-vehicle light fleet currently paying $285.90 in total levy, which would increase to $750.00 under the new rules. A two-unit heavy fleet currently assessed at $478.00 would fall to $50.00. The classification of mobile plant equipment is a separate consideration.
Plant that qualifies as a vehicle under the Land Transport Act and is insured under a commercial motor vehicle policy attracts the $25 flat levy. The same equipment insured under a plant and equipment or material damage policy is instead subject to the non-residential property rate of 0.0776% of sum insured. The coverage placement decision therefore has a direct levy consequence, and brokers should confirm classification and policy placement with fleet clients before renewal.
Beyond the rate and calculation changes, the July 2026 framework alters which asset types fall within the levy’s scope. Domestic aircraft, livestock, forestry, and growing crops will carry a levy for the first time. Boats and watercraft move in the opposite direction – currently levied at 0.1195% of sum insured, they will be exempt from July 1. Levy rates for the newly included categories are 0.0776% of sum insured for domestic aircraft and growing crops, with aircraft subject to a ceiling of $77.60 per unit on domestic routes. Livestock and forestry are assessed at 0.0194% of sum insured with no cap. Rural and agricultural clients are unlikely to have budgeted for these costs, and early broker communication ahead of renewal will be important.
The practical workload for brokers in the lead-up to July 1 centres on identifying which clients face material levy movement and getting ahead of renewal conversations. For commercial property accounts, the priority is establishing whether current levies have been calculated on indemnity or replacement values and running comparative figures at current sums insured. Mixed-use property clients should be assessed for whether a valuation apportionment election could reduce their levy exposure. For vehicle and fleet clients, the focus shifts to confirming vehicle classifications, reviewing TPO policy holders, and resolving any ambiguity around mobile plant placement. Rural brokers should flag the new livestock and forestry levy to affected clients as a cost that will appear on renewal documentation for the first time.
