NSW government announces it will scrap the Emergency Services Levy on insurance policies

In a major cost of living win for consumers, home insurance is set to become up to 15 per cent cheaper in NSW.

Home insurance is set to become up to 15 per cent cheaper in NSW in a major cost of living win.

Home insurance is set to become up to 15 per cent cheaper in NSW in a major cost of living win for consumers.

The price cut is due to NSW premier Chris Minns’ decision to scrap the emergency services levy (ESL), a tax that is used to fund emergency services such as the fire, ambulance and police service in the state, as well as the State Emergency Service (SES).

The ESL is currently charged on all home insurance policies, including both buildings insurance and contents insurance, adding up to 15 per cent on the base premium, the Insurance Council of Australia (ICA) said.

NSW Premier Chris Minns announced the change in Sydney today. Picture: NCA NewsWire/ Dylan Robinson.

Figures from Canstar show the average home and contents policy in NSW is $1736.

A 15 per cent reduction would see households save $260 on their bill.

Insurance premiums are among the household costs that have skyrocketed this year, and are a big contributor to the rise in inflation.

Analysis from Finder found that some home insurance policies went up as much as 104 per cent last year and that 10 per cent of people with home insurance say it is one of their top three most stressful expenses.

The government is yet to reveal what will replace the ESL to fund NSW’s emergency services, or when the levy will be removed from insurance policies.

Announcing the decision Premier Minns said: “Reforming the Emergency Services Levy is not easy, but it’s the right thing to do.”

“For too long this has been in the too hard basket for NSW.”

“But as we face the threat of more natural disasters, we have a significant opportunity to make the system fairer, more sustainable for the future.”

Insurance Council of Australia CEO Andrew Hall has welcomed the move.

The ICA welcomed the move, which it has long lobbied for.

ICA CEO Andrew Hall told news.com.au that in retaining the tax, NSW “has been out of step with the rest of the country” and that the ESL has “artificially inflated insurance pricing in NSW”.

“All other states and territories have found a way to do it,” he said, adding that models that have replaced a levy on insurance premiums in other states have been more broadbased across the community and resulted in each person paying less.

Mr Hall said that it is also a key factor that makes insurance unaffordable for some people and a reason that NSW has a higher rate of uninsurance than other parts of Australia.

“In NSW the average premium is higher than in Victoria and the average sum insured is lower.”

The decision will also result in a cost saving for small businesses as the ESL is also applied to business insurance policies.

The ICA said the cost saving on insurance premiums for business could be as high as 23 per cent.