Insurance costs are set to soar for regional homeowners and businesses, thanks to a massive hike in the fire-services levy.
The Insurance Council of Australia has recommended to its members that it raise the levy by more than 30 per cent in Country Fire Authority zones, which covers most of the state.
Homes will be slugged an extra 31 per cent and businesses 33 per cent.
Those closed to the city and serviced Metropolitan Fire Brigade will be spared, with costs stagnant.
The hike means home owners in CFA areas will pay an additional 85 per cent of their premium, with a home owner paying $1000 for insurance paying $850 in fire levy.
The State Government told the ICA that it would cost an extra 30 per cent to run the CFA, with most of that cost being passed onto the public.
The Government says the extra revenue will pay for $68 million worth of investment in fire stations and vehicles.
Insurance payments by country Victorians contribute 77.5 per cent of the CFA’s funds, with the rest paid for by the State Government.
ICA general manager of risk Karl Sullivan said the Government gave it a figure it needed to raise to pay for fire services and insurers would adjust accordingly.
Extra taxes would likely end in homeowners paying double their insurance premium.
“By the time you take on board the fire-services levy, stamp duty and GST, you are doubling your (insurance) premium,” he said.
“Our position is that the fire service levy discourages people from taking (home insurance out), it . . . leaves people vulnerable and we are working closely with government to work out the transition away from the levy.
The Government had promised to phase out the fire-service levy by 2013, following recommendations by the Bushfire Royal Commission. The levy will be replaced by a new property based tax, which will force every homeowner to pay for fire services not just those who choose to insurance.
A government spokeswoman blamed the former Labor government for the mess, saying “the insurance based levy should have been scrapped years ago”.
“The coalition Government has begun long overdue reform to replace the insurance-based fire services levy with a property based levy,” she said.