Tasmania stands alone: Calls for reform as Fire Services Levy continues to impact insurance costs

Tasmania stands alone: Calls for reform as Fire Services Levy continues to impact insurance costs | Insurance Business Australia

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Tasmania stands alone: Calls for reform as Fire Services Levy continues to impact insurance costs

Calls follow Tasmanian government’s decision to pause reform

Insurance News

By
Roxanne Libatique

The Insurance Council of Australia (ICA) has expressed concern over the Tasmanian government’s decision to halt efforts to reform the Fire Services Levy (FSL), making Tasmania the only region in Australia continuing to fund fire and emergency services through taxes on insurance customers.

In a release, the ICA argued that the FSL – which can increase the cost of various commercial insurance policies by up to 28% – disproportionately affects those seeking to insure their assets against fire damage. This levy has been criticised for raising the operational costs for Tasmanian businesses and generating significant revenue for the government.

Impact of FSL

Data from the State Fire Commission indicates a revenue surge from insurance customers, with figures rising from $33.4 million in the fiscal year 2021-22 to $41.8 million in 2022-23, marking a 25% increase within a year. Furthermore, the revenue from the FSL has nearly doubled since 2018-19, when it stood at $21.4 million.

The ICA said Tasmania’s move contrasts with actions taken by other Australian states, all of which have either eliminated or are in the process of removing their respective fire and emergency services levies on insurance.

The ICA has called on future Tasmanian governments to engage with stakeholders to eliminate the FSL, as suggested by the Blake review, and to seek a more equitable method of funding fire and emergency services.

ICA CEO Andrew Hall highlighted the persistent challenges and the perceived inequity of the levy despite extensive reviews, consultations, and evidence pointing to its inefficiency and unfairness.

“Every other state has abolished or has committed to abolish similar levies, leaving Tasmania as the last tax standing, further disadvantaging its businesses and their customers,” he said. “Not only is the FSL unfair, but it also discourages proper insurance coverage. Abolishing it would enhance affordability and encourage more businesses to adequately insure their assets, ultimately benefiting the entire community.

“We strongly urge the next Tasmanian government to continue to work to abolish this unfair tax on insurance customers in the state.”