As you are now likely to be aware, the government has merged the urban and rural firefighting services earlier this year into a new organisation. The Fire and Emergency New Zealand now delivers fire and emergency services across the country and the cost of this merger was $303 million. The government is funding this by a 40% increase in the fire service levy which as you know is collected as a tax on insurance protection.
We along with others, made submissions to the Government to endeavour to have the levy collected another way instead of the current method of taxing insurances however the Government at this stage has elected to maintain the current method of collection. That said, the current method of collection is temporary and will change again in 2019, although from what we know this change will not reduce the costs for your business and other companies, the fire service levies are more likely to increase..
Unfortunately the earthquakes in the last quarter of 2016 and the severe flooding experienced in the first half of this year has had the effect of increasing property insurance pricing for both commercial and domestic insurance buyers. In order to prepare for future disasters, the Earthquake Commission (EQC) levies will increase from 1 November 2017 in order to help rebuild its National Disaster Fund (NDF), which has been depleted following the Christchurch, Seddon and Kaikoura earthquakes. The EQC currently has a government guarantee and $4.7 billion in re-insurance cover, so homeowners will be covered if there is another natural disaster, however they are now starting to look a bit further ahead to build up those funds for future events.
Insured homeowners currently pay 15c per $100 of insurance cover, up to a maximum of $150 plus GST for each dwelling unit each a year, as part of their insurance premiums. From 1 November 2017, homeowners will pay 20c per $100 of insurance cover, with an annual cap of $200 plus GST on each dwelling unit, a 33% increase.
We thought it was important to keep you up to date with what is currently happening in the insurance market. Should you have any questions about these changes then please do not hesitate to get in contact with your local BWRS Broker.
