10 million reasons for insurance companies to play by the rules
Insurance companies who withhold savings from the new Emergency Services Property Levy will be penalised with $10 million fines, according to NSW Treasurer Gladys Berejiklian.
There are plans to abolish the current insurance-based Emergency Services Levy and replace it with the Emergency Services Property Levy (ESPL). From 1 July 2017, Aussie homeowners will pay this new levy alongside council rates.
The new system is designed so that all property owners contribute to the costs of fire and emergency services, in order to reduce insurance premiums and combat NSW’s high rate of homes being underinsured.
Insurers are being warned that they will face heavy fines of up to $10 million for companies and $500,000 for individuals if they fail to pass on the benefits of the new scheme to customers.
“It is absolutely imperative that insurance companies do the right thing and pass on the tax reductions in full,” Emergency Services Levy Insurance Monitor Alan Fels said. “The aim is to totally eliminate the burden of the current tax on consumers and businesses.”
Fels, along with Deputy Monitor David Cousins, will be responsible for ensuring that insurance prices are reasonable and that insurance companies comply with the new, fairer system by passing on savings.
“Professors Fels and Cousins will be our ‘cops-on-the-beat’ to ensure savings are passed on to households as the Government undertakes this important reform,” Berejiklian said.
The new ESPL scheme will be budget-neutral and won’t raise extra revenue for. In fact, the government is expecting that the majority of NSW households will be better off under the new scheme, saving around $40 a year.
Debate around that figure is raging, however, with some sources arguing that the new scheme will hit those least equipped to handle it the hardest, with the re-shuffle meaning that households currently unable to afford home insurance may see rates rise by $160 instead.
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