'Find another way': ICA intensifies calls to abolish insurance taxes

The Insurance Council of Australia (ICA) has repeated its call for states and territories to abolish taxes and levies on insurance.

The ICA’s Insurance Catastrophe Resilience Report, released yesterday, says taxes add 20-40% to the cost of home and contents premiums.

“To improve levels of underinsurance and non-insurance all states and territories should abolish stamp duty on insurance, and NSW should follow other states and abolish its Emergency Services Levy (ESL),” the report says.

“Tasmania should continue on its already announced pathway to abolishing its Fire Services Levy.

“The Insurance Council acknowledges the significant loss of state revenue from abolishing stamp duty on insurance and calls on the Federal Government to incentivise states and territories to undertake this important reform for the benefit of all Australians.”

ICA CEO Andrew Hall told insuranceNEWS.com.au that a sticking point is finding a replacement for the significant revenues that insurance taxes bring.

“It has everything on its side in terms of a rational argument that you could win,” he said.

“Unfortunately we’re talking about pots of revenue that state governments would need to find elsewhere.

“One of the challenges we have as an industry – despite the unfairness of it all, particularly for customers – is that we also need to be thinking about what the answer is to help state governments transition away from this source of revenue to something else.

He says insurance taxes “punish people that are doing the heavy lifting for themselves”.

“I think that argument is actually accepted by many people in government in NSW in relation to the ESL. But we get back to the problem that it is such a significant source of revenue that it’s hard for them to make a decision without having a plan as to where they are going to go to.”

But Mr Hall believes change will have to come eventually, if severe weather events increase in frequency and severity as predicted and insurance premiums continue to become more expensive for the worst-affected communities.

“If extreme weather events continue and communities are impacted like this, without a doubt there needs to be some rebasing of state taxes as part of the overall equation for insurance affordability.

“Perhaps over the next few cycles of state elections we’ll have the opportunity to have that discussion.”

Click here to read the Insurance Catastrophe Resilience Report.