Did you know that if you have fire and general insurance policy, you are paying a levy that helps fund Fire and Emergency New Zealand (FENZ)? It is a form of tax, which funds up to 95% of the public service – in reality it penalises policyholders for protecting their assets.
The Fire Emergency Levy has been criticised by insurance companies as grossly unfair, but the government recently announced that is would review the funding regime to hopefully find a more ‘stable, simple funding system’ that spreads the cost of the services ‘fairly among business and individuals’.
This from www.insurancebusinessmag.com:
“Applying a levy on insurance to pay for the fire service first came into effect in 1993, and since then, there have been well over a dozen reviews which have highlighted the pitfalls of that system,” Insurance Council of New Zealand (ICNZ) chief executive Tim Grafton told Insurance Business.
“One major problem is that it’s unfair, as it means that a public good provided to all New Zealanders is only paid for by those who insure themselves. That means there is a freeriding effect for those who don’t insure, as they still benefit from the service without having to make a contribution. There is no good rationale for doing this, especially since people who insure their homes in case of a fire will be put back on their feet by their insurer, and you are essentially penalising them for doing the right thing.”
Photo by Jeremy Bishop