When will the taxes on insurance go?

27 July 2010, the date the Victorian Government promised to remove Fire Service Levies from insurance.

Many within the insurance industry and others in Victoria are awaiting the news from the Victorian Government that the promise they made at the last State election will be honoured and that the completely unjust and downright crazy Fire Service Levy will be phased out from commercial property, and home & contents insurance from 1 July 2012 with it being removed completed by 30 June 2013.

The decision to remove this impost on Victorians was in fact made by the Brumby Labour Government in line with the recommendation of the “Black Saturday” Royal Commission. Mr Brumby announced this on the 27th August 2010. After many years with my own personal campaign through www.NoTaxOnInsurance.com.au and other avenues, it was one of the great highlights of my career to see the end of this insidious tax.

I thought we were certain to see the end of the tax even with the change of government in Victoria as Mr Ryan, the leader of the Victorian National Party was such a harsh critic of the tax.

The main problem I saw with the tax was that it resulted in too many home and business owners not insuring or if insuring not insuring enough. This tax on the prudent and risk averse meant that many people were found homeless or in the case of business, with their life’s work turned to ashes during the Victorian “Black Saturday” bushfires. Many families are yet to recover despite the very generous donations of the Australia people and people from all around the world for that matter.

With tax on tax on tax, it got to the ludicrous position that for every $1,000 paid by Victorian rural business they were paying tax of $1,226.40. Even Mr Brumby had to accept that when you double the price of any commodity people by less. This is simple basic economics. The full calculation speaks for itself in the table below:


The elephant in the room was how many people lost their lives trying to save their uninsured home or business rather than flee in safety knowing they could replace their assets with insurance.

Insurers have to have the basis for the removal of the Victorian Fire Service levy shortly as it is only a few short weeks before the June renewals will start to be processed and forwarded out to Insureds and their insurance brokers.

We have seen a lot of broken promises of late, particularly in Federal politics of late. Victorian business cannot afford to see this promise broken. With insurance premiums on the rise due the massive natural disaster payouts during 2011 in Australia ($4.9 billion) coupled with those from elsewhere around the world combined with higher reinsurance rates means that further delays will force more and more home and business owners to cut insurance. Victoria will suffer as a result.

Victoria is not the only state with this counterproductive tax. New South Wales, Tasmania (business insurance only) and New Zealand all retain the tax which the other Australian states have got rid of years ago. I only hope we do not have to witness the loss of another 173 lives and yet another Royal Commission to show these governments the bleeding obvious. All in society benefit from a modern well equiped fire service, we all need to contribute to the cost, not just those smart enough to insure.

There is no doubt in my mind after my discussions with an Insured LMI is helping following the Christchurch/Canterbury earthquakes in New Zealand that they were under insured in an attempt to reduce their insurance premium, a premium artificially inflated by a burdensome fire service levy. When will all governments learn?

Come on the Baillue Government, do the right thing for your state and confirm that tax will go from 1 July 2012.



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