If you handle business or residential property insurance claims
in Victoria, you should be aware that the government intends to
extinguish the fire services levy.
The Honourable Premier John Brumby recently announced his
intention to adopt the Victorian Bushfires Royal Commission's
recommendation to replace the fire services levy
("FSL"), previously paid by those who
have property insurance, with a progressive property based levy, to
be charged to all property owners.
It is expected that the property based levy will:
ensure that the funding of emergency services will be more
fairly shared by all property owners who benefit from the
reduce the cost of property insurance; and
take away an insurer's burden to recover the FSL from
insured property owners.
It is anticipated that the new system will be in place by 1 July
What is the FSL?
Currently, the Metropolitan Fire Brigade and Country Fire
Authority, are funded largely through:
insurers, who attach a FSL to insured's who take out
property and building insurance;
direct contributions received from the State Government;
contributions received from metropolitan councils.
The current insurance based model allows fire risk to be
distributed amongst insureds. This means that a property with a
high fire risk, such as a fish and chip shop, will pay a higher
levy than a low fire risk property, such as a library.
After the Black Saturday fires in Victoria, it has been
suggested that the current insurance based model is no longer
appropriate as high premiums are becoming a disincentive for
property owners to adequately insure. This is particularly
exacerbated by the fact that property owners who do not have
insurance and do not contribute to the levy, receive the same
protective fire services as insured property owners. The result is
a funding burden which is spread across a smaller proportion of
insured property owners.
What is the property based levy?
Details of the property based levy are not yet known. The only
information released by the government is that it would take steps
to ensure that insurers pass on the full benefit from having the
levy removed from premiums. The Brumby government has indicated
that they will determine the best model by embarking on a period of
consultation with the options being released in February 2011.
We will release a further E-Alert once the options proposed by
the government are released in February 2011.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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