Opinion

The Insurance Council of New Zealand (ICNZ) is calling on political parties to back volunteer and paid firefighters by funding them appropriately for their services, much like the police are funded.

It follows the publication of the summary of the submissions for the Fire and Emergency New Zealand (FENZ) funding review, announced by the Minister of Internal Affairs, Hon Tracy Martin, in March 2019.

“ICNZ supports a strong fire service that is integrated appropriately with other emergency services and properly funded,” says Tim Grafton, chief executive of the insurance Council.

“We have never considered that funding FENZ through a levy on insurance is appropriate, and we’re pleased with the overwhelming support from the submissions for future funding to be supported by general taxation. It’s now time this was implemented.”

FENZ is funded with a levy on all contracts of insurance.  Residential insurance has a levy rate of 10.6c per $100 insured to a maximum of $106, contents insurance levies are calculated at that rate to a maximum of $21.20. Motor vehicles pay $8.45.

While the council believes that the best option would be full taxpayer funding, it also supports a mixed model that includes a greater contribution from the Crown, via general taxation, combined with direct levies on property based on value or size, and motor vehicles through existing vehicle licensing methods.

“Unlike other services that help keep our communities safe, like police, FENZ is funded by a levy imposed only on people who take out insurance to protect their homes, contents, motor vehicles and other property.

“This is a grossly unfair model that doesn’t accurately reflect the nature and breadth of FENZ’s work and penalises people who try to do the right thing to protect their assets.”

The report also identified significant shortcomings of the current funding model, including a lack of universality because not every property was insured, a reducing connection between FENZ’s activities and property insurance as FENZ’s mandate had extended to include responses to non-fire emergencies like medical emergencies and natural disasters, the insured value not necessarily relating to risk that FENZ would support, the costs and complexities for insurers and brokers to collect the levy via insurance, and the distortionary effects of the levy on insurance – making insurance more expensive for consumers and creating barriers for new insurers to enter the market.

“We now have an opportunity for the first time in many years to get this right.  Hopefully, all parties will support change to a fairer, more transparent and less costly system,” concludes Mr Grafton.



September 2020

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