The insurance industry has savaged the Victorian government’s move to boost the fire services levy in regional areas of the state, arguing it will increase the problems of underinsurance seen in the wake of this year’s bushfire disaster.
The levy is paid on insurance premiums and contributes to the funding of emergency services.
This year’s levy for businesses in country areas is set to jump from 68 per cent of the policy amount to 84 per cent, and that for householders from 26 percent to 31 per cent.
The levy for metropolitan insurance holders is expected to remain static or fall slightly over the same period.
National Insurance Brokers Association chief executive Noel Pettersen said once taxes were added into the equation a customer would pay a total of $223 on a $100 premium.
"Given all of the problems with underinsurance and nil insurance after the tragic bushfires it’s impossible to understand how the government can justify this increase," Mr Pettersen said.
"Why do people in rural Victoria have to pay more in taxes and charges than they do for the actual insurance policy? It’s absurd."
He said insurance needed to be affordable to be effective, and this had been highlighted in the bushfire disaster in February.
"Country Victorians are being unfairly and unjustifiably punished."
Peter Ryan, Opposition
"Insurance isn’t a sin. They shouldn’t be able to tax insurance at the same rate they do alcohol, or tobacco or gambling," he said.
Mr Pettersen said the situation was unfair and needed to change urgently for the economic well-being of the community.
Insurance Council of Australia’s general manager communications, Paul Giles, said the government was set to collect $500 million from the levy this year, representing an increase of 30 per cent from the previous financial year.
Opposition bushfire response spokesman Peter Ryan said the system discouraged people from insuring because only those who took out insurance paid the levy.
"Country Victorians are being unfairly and unjustifiably punished because of this year’s bushfires and the effort that was mounted to fight them," Mr Ryan said.
He said the system for funding the state’s fire brigades needed to be reformed because current arrangements were unjust and unreasonable. The increase could force businesses to close in the current economic climate.
Mr Ryan said the government needed to co-operate fully with the federal government’s Future Tax System review which has flagged it will investigate the levy.
A spokesman for Victorian Treasurer John Lenders said it was appropriate that the insurance industry contributed more to the funding for fire services this year, just as the state government had done.