Lloyd's Market Association Bulletin

LMA16-036-PD  |  15 August 2016
           

Australian Fire Brigade Charges Scheme: New South Wales

                        

Insurers (or their coverholders) in New South Wales (NSW) currently charge an Emergency Services Levy (ESL) in addition to the risk premium to cover their contribution to the emergency services annual budget. It is the responsibility of insurers to ensure that they are charging the correct rate to meet their share of the levy and, in light of the transition to a property-based levy from July 2017, make sure they do not continue to charge an ESL after 30 June 2017. Substantial penalties of up to AUD10m for a body corporate and AUD500,000 for an individual can be applied in the event that an insurer (or its coverholder) are found to have overcharged ESL or misled their insureds in respect of the reforms.

The NSW ESL Insurance Monitor requires insurers (or their coverholders) to send out a Prescribed Notice. This is a legislative requirement and it is an offence for an insurer (or their coverholder) to issue an invoice or statement as to the price payable for a regulated contract of insurance unless it includes the information contained in the Notice.

The relevant legislation can be found on the NSW Government website and further information on the NSW ESL Insurance Monitor, including the current drafts of the Guidelines on the prohibition against price exploitation and the Guidelines on the prohibition on engaging in false or misleading conduct in relation to the emergency services levy reform, can be found on the NSW ESL website.

The LMA understands that by 30 September 2017, the NSW Department of Justice (DoJ) will request that insurers (or their coverholders) file their returns declaring their premiums for the 2016/17 fiscal year. The DoJ will use these filing to ascertain 2016/17 market shares in order to calculate each insurers contribution to the 2016/17 ESL. The NSW government recently delivered the 2016/17 budget detailing the ESL contribution of AUD785m, an increase of 2.1% on the AUD769m in 2015/16.

The majority of local insurers are utilising the services of Professional Financial Solutions (PFS) to assist them in determining the ESL rate that they should charge in order to cover their liabilities to the emergency services budget and how best to transition. A similar service was offered to syndicates during the similar transition in Victoria. For more information, please contact Doug Drysdale (PFS): dougdrysdale@pfsnet.com.au or +61 2 9225 6117.


Previous LMA bulletins
The LMA has published a number of Bulletins relating to the transition from a levy charged on insurance premiums to a property-based levy for funding of emergency services in both Victoria (LMA13-015-NS, LMA12-022-NS and LMA12-017-NS) and New South Wales (LMA16-024-PD and LMA14-027-NS).

 


Patrick Davison
Senior Executive, Underwriting