An insurance broker has spoken out about how the fire services levy is contributing to the spiralling costs for the average household and adding to Australia’s severe underinsurance problem.

The fire services levy is one of the insurance industry’s most contentious current issues, with Queensland, WA and South Australia all removing their levy, while Victoria, NSW and Tasmania continue to drag their heels.

Brokers have a tough task negotiating deals for their clients in an already costly climate, but the industry is applying further pressure to force the levy out.

John Paul Whitbread, director of Whitbread Insurance Brokers, told The Age that the fire service levy had soared from 65 per cent of a total premium to 95 per cent from March to May this year, in addition to a five per cent rise in insurance premiums.

“It’s problematic in the sense that within the current climate, the economy is on the nose, there’s the carbon tax, there’s general expenses, occupational health and safety, everything’s going up, and over and above that to say to your clients, ‘Your premium is 35 percentage points more,’ is a slap in the face,” Whitbread said.

“Some clients can’t afford to pay it and if there was a catastrophe, you can have social issues. The underinsured issue is a problem,” he added.