Insurers in Victoria will have to deal with tough new guidelines meant to prevent price exploitation and misleading or deceptive conduct related to their removal of fire services levy. The Fire Services Levy Monitor says it will release the final guidelin
Australia: Insurers to face tough guidelines over fire levy removal
24 April 2013
published by www.asiainsurancereview.com
Australia — Insurers in Victoria will have to deal with tough new guidelines meant to prevent price exploitation and misleading or deceptive conduct related to their removal of fire services levy. The Fire Services Levy Monitor says it will release the final guidelines next month after a brief consultation period.
Under the guidelines, insurers are expected to provide policyholders with detailed information about the amount of FSL paid in the current financial year, and what their premiums would look like without the levy.
Insurers have historically charged their fire insurance customers a levy to meet their liability to help fund the fire services in Victoria. This liability will be removed from 1 July and will be replaced by a property-based levy scheme administered by Local Councils and the State Revenue Office.
Policyholders are looking for reassurance that their premiums will come down by the amount of the removed levy, says the Fire Services Levy Monitor Professor Allan Fels.
There is potential for confusion with the change, and consumers need more information from their insurers, he says. So far the level and quality of information provided to policyholders by insurers about the impact of the fire insurance levy reforms has been less than satisfactory, he adds.
The guidelines stress that individual policyholders should expect to see the full amount of any FSL they paid this financial year removed from premiums entirely from 1 July 2013.
If insurance companies claim that higher costs offset any part of the benefit of the reduced FSL, they will be expected to justify in detail these cost increases, says Professor Fels.
The Monitor will be using the guidelines to assess the compliance with Fire Services Levy Monitor Act 2012. Breaching the Act can attract fines of up to A$10 million (US$10.25 million) for a company and A$500,000 for an individual.
