Lloyd's Market Association Bulletin

LMA17-030-PD  |  04 August 2017

New South Wales Emergency Services Levy

The LMA has published a number of Bulletins relating to fire brigade charges in Australia including (LMA13-015-NS, LMA12-022-NS and LMA12-017-NS) and New South Wales (NSW) (LMA16-024-PD and LMA14-027-NS). Following on from LMA16-024-PD, the New South Wales (NSW) government has reversed its decision to transition from a levy charged on insurance premiums to a property-based levy for funding of emergency services.

To recap, insurers (or their coverholders) in NSW historically charged an Emergency Services Levy (ESL) in addition to the risk premium to cover their contribution to the emergency services annual budget. It was the responsibility of insurers to ensure that they are charging the correct rate to meet their share of the levy. 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) is found to have overcharged ESL or misled their insureds in respect of the reforms.

The NSW government had passed legislation requiring insurers to stop collecting the ESL after 1 July 2017 but, shortly before that date, the transition to a property-based levy was deferred pending a review of the impacts of the changes. For further information on the implications of this change, please see the update from Lloyd’s International Trading Advice (LITA).

The majority of local insurers utilise the services of Professional Financial Solutions (PFS) to assist them in determining the ESL rate they should charge in order to cover their liabilities to the emergency services budget. A similar service has been offered to syndicates. Doug Drysdale (PFS) can be contacted at dougdrysdale@pfsnet.com.au or +61 2 9225 6117. Mr Drysdale will also be in London during the week commencing 14 August and anyone interested in meeting with him should contact the undersigned.

Patrick Davison
Senior Executive, Underwriting