Lloyd's Market Association Bulletin

LMA18-029-PD  |  12 June 2018

New South Wales Emergency Services Levy 

As reported in LMA16-024-PD, the New South Wales (NSW) government reversed its decision to transition from a levy charged on insurance premiums to a property-based levy for the funding of emergency services. 

To recap, insurers (or their brokers, coverholders or service companies) in NSW are required to charge an Emergency Services Levy (ESL) alongside 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 an appropriate rate to reflect their market share and so fund their portion of the budget. 

The NSW Government first introduced legislation to abolish the levy and then rescinded it. Instead, it passed further legislation – the Emergency Services Levy Act 2017 (NSW) - to address the potential of over-collection of levies during the 2015/16 and 2016/17 financial years. The role of Insurance Monitor has been created in order to assess whether insurers are liable for over-collection amounts. 

The Monitor is required to make an over-collection determination for each insurance entity operating in NSW (which includes brokers, coverholders and service companies receiving premiums on behalf of underwriters outside NSW). The Monitor is also tasked with ensuring that any over-collection amount, if practicable, is refunded to the policyholder. Details can be found here of which insurance entities have been contacted by the Monitor to date as part of the over-collection determination process.

For those LMA members (either directly or via their brokers, coverholders or service companies) who are members of the Australian Fire Brigade Charges Scheme (AFBCS), the LMA, in discussion with the Scheme administrators in Australia (PwC), have agreed a protocol to assist where members are required to pay refunds following an adverse over-collection assessment by the Monitor and are in credit with the Scheme over the relevant period. Further details of this protocol can be found in the attached email from PwC which has been sent to all Scheme members. 

Following the legislative changes, the AFBCS Third Reference Manual is also being updated. Once the updates have been completed and the new Reference Manual published, a further LMA Bulletin will be circulated. 

If you have any further questions, please contact Patrick Davison: patrick.davison@lmalloyds.com or on 020 7327 4595. 

Patrick Davison
Manager, Property, Reinsurance and Delegated Underwriting