A new round of increases to the fire services levy in NSW and Victoria means insurance premiums in those states will rise. The fire services levy is charged by state governments on insurance premiums in NSW, Victoria and Tasmania to fund fire services.
Since the Victorian bushfires, the levy has been under continued scrutiny. This is because households who do not pay for insurance benefit equally from fire brigade services funded by their insured neighbours. The Victorian government subsequently made the decision to scrap the levy from 2012.
The levy has been scraped in all other states. In Western Australia, South Australia and Queensland, local council rates fund fire services. According to National Insurance Broker’s Association (NIBA) Chief Executive Noel Patterson, this is a more equitable way of funding fire services, as all households are charged, not just those with insurance.
The origins of the levy go back to the 1666 Great Fire of London. After this catastrophic event, UK insurers began charging customers a fire levy to fund their own private fire brigades. The idea was adopted in Australia, where many insurers funded their own fire brigades through a levy on customers. Gradually, fire services came under state legislation, but state governments continued to pass the costs onto insurers who in turn had to pass the costs onto customers.
The levy was scraped by Queensland in 1984, with other states following suit over the next two decades. It remains to be seen whether NSW, Victoria and Tasmania will replace the levy, or if insurance-paying customers will continue to bear the burden of funding their state’s fire services.