Insurers have welcomed the NSW Government’s surprise announcement last week that the emergency services levy (ESL) on insurance policies will be abolished in favour of a property-based charge.

The Insurance Council of Australia (ICA) recently stepped up its campaign for the removal of all insurance taxes including the NSW ESL, which it says typically adds 21% to the cost of cover.

ICA research released last month found replacing the ESL could boost State Government coffers by $84 million, and CEO Rob Whelan says the announcement is a win for households and state finances.

“It is fairer and will reduce the financial burden on those households that buy insurance,” he said. “ICA has been advocating reform of NSW’s ESL for decades, and insurers are committed to passing on the savings to their customers.”

However, Mr Whelan notes insurance premiums in all states and territories are still subject to stamp duty and GST.

“As the Turnbull Government… contemplates how to reform the tax system to make Australia’s economy more resilient, productive and competitive, it’s clear that replacing state taxes on insurance must be part of the final package,” he said.

National Insurance Brokers Association CEO Dallas Booth was equally delighted.

“We have been pushing for this for years,” he told “It’s a great win for policyholders across NSW, and we look forward to working with the Government and ICA on the transition process.

“Stamp duties are more difficult. They raise a lot of money. Our position is that they have to be withdrawn, but we’ll leave it to the experts to decide how best to make up the lost revenue.”

IAG Consumer Division CEO Anthony Justice says the end of the levy is welcome news for customers.

“IAG is a strong advocate for improved taxation bases and reform that will shift revenue dependency from transaction-style taxes towards those that offer a greater economic benefit for Australian households,” he said.

QBE says it is “wholly supportive” of the decision.

“As recognised in numerous reviews, including the 2010 Henry taxation review, insurance taxes are one of the most inefficient taxes levied in Australia and should be abolished,” it said.

“These inequitable and inefficient taxes and levies imposed on insurance products affect affordability of insurance and exacerbate the broader societal issues of non-insurance and underinsurance, and are often ultimately borne by the Government and the public.”

Allan Fels has been appointed Emergency Services Levy Monitor to oversee the transition, after performing a similar role in Victoria.

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