Industry fears are coming true, as soaring NSW taxes force business owners to drop or reduce insurance cover.
As reported by insuranceNEWS.com.au, the state’s emergency services levy (ESL) on insurance is set to increase significantly on July 1. As a result more than 50% of the cost of NSW home and contents premiums, and 60-70% of commercial premiums, will go on taxes.
The Insurance Council of Australia warned last month that the higher cost of premiums would result in a $20 million reduction in pre-tax expenditure on insurance.
LMI Group MD Allan Manning, who has campaigned for the removal of insurance taxes, says it is “already happening”.
“I have been contacted by both insureds and brokers advising that they/their clients have elected to drop business interruption or not to fully insure due to the increased financial burden created by the massive increase in the ESL,” he said.
“This is an appalling and untenable situation that is putting the NSW economy and many businesses, and the workers they employ at financial risk.”
Mr Manning urges brokers to write to their local MP and “clearly set out the consequences” of the increased levy.
He says the levy on insurance should be dropped and replaced by a “fairer” method – as was planned by the NSW Government prior to a u-turn two years ago.
Broker Gallagher has also reported concerns surrounding the levy increase, particularly in the context of the hard market.
“Businesses are already feeling the strain on increased insurance premiums and this will compound the issue with the new charge being applied,” Gallagher Newcastle Area Director Mark Bramley said.
“Business owners need to be aware of the impact this could have on their property insurance and budget accordingly for the increase.”