Premium hikes on the horizon

The Insurance Council of Australia (ICA), which represents the general insurance industry in the country, has issued recommendations to its members that the fire service levy on policies be raised by at least 30 per cent in Country Fire Authority (CFA) zones. A CFA zone covers most of the state of Victoria, but those with homes closer to the city, which are served by the Metropolitan Fire Brigade, will not be faced with premium hikes. Karl Sullivan, ICA general manager of risk, said that the state government has issued the body with a sum that it must raise to pay for fire services, so insurers have had to adjust their prices accordingly. The government of Victoria says that the added revenue will pay for the necessary $68-million investment in fire stations and vehicles.
The Herald Sun has reported that homeowners in the CFA areas will be paying an additional 85 per cent of their normal premium costs, with the average homeowner paying around A$1,000 for cover, $850 of which would be the fire levy. The fire service levy is controversial within the insurance industry of Australia, as the ICA believes that it discourages people from purchasing private insurance cover. From 2013, the government has said it will phase out the levy, replacing it with a new property-based tax that forces every homeowner to pay for fire services, not just those who choose to pay for insurance.