Changes to Fire and Emergency Services Levy

Changes to Fire and Emergency Services Levy

31 May 2017 - On 30 May 2017 the NSW Government made an announcement that it is deferring its plan to change how the Fire and Emergency Services Levy (FESL), which funds the state’s fire and emergency services, is collected. This will impact anyone with a NSW based property.

What is the Fire and Emergency Services Levy?

The FESL funds services like the Fire and Rescue (FRNSW), Rural Fire Services (RFS) and NSW State Emergency Services (SES). These services exist to protect the community from fire, flood, storms and other natural disasters.

The levy is currently collected by insurers on behalf of the NSW Government and is included as part of the NSW Home (including onsite caravan), Farm, Motor, Fire, Industrial Special Risks (ISR) and Contract Works insurance policies.

What changes did the NSW Government originally plan to introduce?

It was originally planned that from 1 July 2017, the FESL would be funded via council rates, replacing the existing process of funding through insurance.

It was planned that the new levy would be clearly listed on council rates notices as a separate item and would be paid in the same way as council rates. As a result the old levy would have been removed from NSW Home Farm, Motor, Fire, Industrial Special Risks (ISR) and Contract Works insurance policies.

Why is the NSW Government deferring from FESL?

In her announcement on 30 May 2017, Premier Gladys Berejiklian confirmed that the NSW Government will defer the intended switch from insurers collecting the levy to local councils.

She added that in the majority of cases across NSW, fully insured people would be better off under the new system, however there was concern that some fully insured businesses may face unintended consequences.

What does this mean to you?

The levy will continue to be collected via insurance policies until the NSW Government has completed its review of the policy.

In the meantime, the NSW Government will work with local government, fire and emergency services, the insurance industry and other stakeholders to find an alternative solution.

What is action is Aon taking?

There has been no consultation to date between the NSW Government and the insurance industry about the decision to defer the introduction of FESL.

Aon has been disappointed in the lack of communication and timing of such a drastic change in a policy which we know will impact individuals and businesses.

Aon’s focus right now is to better understand the situation and the implications for our clients. We are working closely with insurance industry bodies, such as the National Insurance Brokers Association (NIBA), to deliver our clients with insights based on facts that will achieve the best outcome for them.

At this time the insurance industry is not aware of how the levies will be calculated for June and onward as the insurers had been reducing the amount they collected progressively to nil by 1st July 2017.

Aon will be involved in a number of meetings with the NSW Government and NIBA throughout this week to clarify some of the unknowns. We are also communicating with our major insurance carriers and will keep you updated on further developments as soon as it becomes clearer what the implications are to you.