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Insurance Council disappointed insurance premiums continue to fund Fire and Emergency Services

30 Apr 2021

The Insurance Council of New Zealand is disappointed the government has announced its decision to continue to fund Fire and Emergency New Zealand(FENZ) services by taxing or levying people’s insurance premiums.

However, ICNZ CEO Tim Grafton said we will engage constructively to achieve a better way of applying the tax on insurance consumers which should include a greater government contribution to funding FENZ.

A recent review focused on taxing insurance premiums or taxing property owners.  “Continuing to tax people for a public good such as fire and emergency services is out of step internationally.  The evidence shows that other countries have had no difficulty in funding these services in other ways.   We disagree with the analysis that the levy is fit for purpose to fund the fire service for the future and we disagree that FENZ can’t be funded another way.  New Zealand will be the last country standing on making insurance less affordable by taxing people who choose to insure.  Governments around the world understand the important role insurance plays in rebuilding an economy after a natural disaster and encourage as many people as possible to insure.  The tax on insurance costs New Zealanders about $600 million each year” he said.

“It is not a fair tax because people that are doing the right thing by insuring are paying for fire and emergency services for everyone. It is bad for consumers, it is bad for insurers and it is bad for government.  Consumers pay more for their insurance, insurers are left to administer a complex collection service, and the government has no firm forecasts for budgeting because it depends on whether people insure or not” he said.

“While we are disappointed with the outcome, we will of course continue to engage constructively with the Minister and her advisers and we look forward to meeting in due course” he said.

We have asked the Department of Internal Affairs to release the submissions made on the funding review and subsequent analysis and advice it provided so we can scrutinise the depth and quality of its work.