Levies on Fire Services: New Approaches Could Impact Commercial Property Costs

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

According to projections by the Insurance Brokers Association of New Zealand (IBANZ), total levies across commercial properties could see a dramatic rise, potentially doubling under the current consultation proposals.

"Our members are already observing clients either cancel coverage or decrease their coverage level as they attempt to navigate prolonged high inflation and higher insurance premiums," says Mel Gorham, CEO of IBANZ.

"This new approach will likely make premiums less affordable, leading to more instances of underinsurance or decisions to forego insurance altogether," she further added.

The revised framework for the Fire and Emergency New Zealand (FENZ) levy is scheduled to begin on July 1, 2026, but critical decisions regarding its collection methodology are required by December 2023 to give the insurance sector ample time to implement the changes.

The suggested revision includes switching the calculation base for the levy from the current indemnity value method to the sum insured typically used in insurance policies. Presently, the current levy for commercial building insurance is calculated based on indemnity value.

Gorham points out that for older or poorly maintained buildings, the indemnity value can sometimes be as low as 25% of the sum insured, and the proposed model hasn’t thoroughly considered the full impact of this shift.

"We have been highlighting the potential affordability issues if the disparity between sum insured and indemnity value isn't taken into account," she mentioned to insuranceNEWS.com.au.

IBANZ has raised alarms that building value increases could lead to levy spikes by up to 400% by the time the changes are fully implemented in July 2026 if properties are to stay adequately insured.

The consultation document notes that the non-residential property rate would decrease marginally to NZ11.51 cents per $NZ100 insured from NZ11.95 cents. However, Gorham maintains that this reduction falls short of mitigating the comprehensive impacts, which also include expanding the levy to currently exempt assets where FENZ services are less likely to be utilized.

• Aircraft
• Marine vessels docked at wharves or marinas, or tethered at sea
• Crops and livestock situated far from fire stations
• Water tanks and retaining walls typically not susceptible to fire damage

It's worth noting that several New Zealand airports maintain their own crash firefighting capabilities funded through landing fees. Levy application to search and rescue helicopters could also increase their insurance costs.

"Search and rescue helicopters often support FENZ with firefighting operations, so the levy might ultimately be passed back to FENZ through the fees charged for their services," IBANZ indicates.

FENZ stated that it will compile the feedback received to aid the Minister of Internal Affairs in making informed recommendations. The consultation paper’s submission period concluded last week.

Published:Monday, 27th May 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Insurance News

Clear

Australian Government Enacts Stringent Reforms to Protect NDIS Integrity

02 May 2026: Paige Estritori

The Australian Government has enacted significant reforms to the National Disability Insurance Scheme (NDIS) to enhance its integrity and sustainability. These measures aim to protect the scheme from exploitation and ensure it continues to serve Australians with permanent and significant disabilities effectively. - read more

TAL Unveils Innovative TPD Support Option and Enhanced Income Protection for Self-Employed Australians

02 May 2026: Paige Estritori

Leading Australian life insurer TAL has announced significant enhancements to its flagship retail product, Accelerated Protection. These updates include the introduction of the Total and Permanent Disability (TPD) Support Option and strengthened income protection features tailored for self-employed individuals. - read more

AustralianSuper Announces Significant Insurance Premium Increases

24 Apr 2026: Paige Estritori

AustralianSuper, one of Australia's largest superannuation funds, has announced substantial increases in insurance premiums, effective June 2026. This decision affects approximately 1.7 million members and is primarily driven by a notable rise in mental health and disability claims. - read more

Escalating Insurance Premiums Pose Challenges for Australian Retirees

24 Apr 2026: Paige Estritori

For many Australian retirees, the dream of a comfortable and secure retirement is being overshadowed by the escalating costs of home insurance. Over the past five years, the average cost of home insurance in Australia has surged by 51%, according to analytics firm Finity. This substantial increase is placing considerable financial pressure on retirees, many of whom are on fixed incomes and find it challenging to accommodate these rising costs. - read more

Australian Insurers Navigate Rising Claims and Cost-of-Living Challenges

24 Apr 2026: Paige Estritori

As Australian households grapple with escalating cost-of-living pressures, the insurance industry is facing the dual challenge of maintaining coverage affordability while managing an uptick in claims, particularly related to mental health and disability. Recent research from national insurance provider Youi highlights that over two in five Australians (42%) report a deterioration in their financial position over the past two years, with 66% indicating they are just keeping up or likely to struggle if faced with unexpected expenses. - read more

Click for more Insurance News