NSW to scrap emergency services levy on home insurance, potentially saving you hundreds

In a landmark move, the New South Wales government, led by Premier Chris Minns, has announced a major shift in how emergency services will be funded, promising to replace the levy on home insurance with a wider, state-wide contribution method.

The emergency services levy on home insurance premiums has always been a contentious issue. Under the current arrangement, the emergency services levy results in approximately 18% higher costs for policyholders. Meanwhile, those without home insurance (about 17% of homeowners) get off scot-free, paying nothing for emergency services yet benefitting nonetheless. 

The previous effort to revamp the system was back in 2019, but it was deemed too complicated at the time. Yet, with increasing threats from fires, floods and other natural disasters, leaders have now recognised the urgency to update the system, aiming to motivate more residents to buy home insurance, thus broadening the risk pool and making communities more resilient. 

This proposal has received broad support from major stakeholders like the Insurance Council of Australia, the Financial Rights Legal Centre and Business NSW. 

According to the Insurance Council of Australia (ICA), insurers are expected to pass the newfound savings onto the customer, reducing the price of policies by an average of 15% for individuals and as much as 23% for businesses.

“Reforming the ESL will be a major win for insurance affordability in New South Wales, an issue that is being discussed around kitchen tables and in small businesses around the state,” ICA CEO Andrew Hall said in a statement.

What This Means for You

This move is expected to bring several key benefits to residents and business owners in NSW. Here’s how it may impact you:

• Reduced insurance costs. Homeowners are likely to see a welcome reduction in their insurance premiums, making it much more affordable.

• Broader insurance uptake. With insurance becoming more accessible, a higher number of households could opt for coverage, making your community that much more resilient thanks to a larger risk pool. 

• Support for local businesses. Cheaper insurance means more manageable expenses for small businesses, supporting them and the wider communities in which they operate.

As of now, this proposed reform is still in its early stages. NSW Treasurer Daniel Mookhey will be engaging in consultations with various stakeholders and industry experts, and will release a discussion paper to facilitate this consultation process.

While you await these potential savings from the proposed reform, it's a great time to explore other ways to save on your home insurance. Take a moment to compare your current policy with other options available in the market and ensure you're getting the best value for your money.