Changes to the NSW Emergency Services Levy explained

What is the Emergency Services Levy (ESL)?

The NSW Emergency Services Levy (ESL or FSL) funds important emergency services like the Fire and Rescue (FRNSW), Rural Fire Services (RFS) and NSW State Emergency Services (SES), that keep the community safe.

The levy is currently collected by insurers on behalf of the NSW Government and is included as part of NSW Home (including onsite caravan), Motor and Fire and ISR insurance policies.

What's changing?

In a move to create a fairer system for everyone, the NSW Government is introducing a new approach to fund emergency services.

From 1 July, 2017, the NSW Government is:

  • Removing the ESL charged on insurance policies
  • Replacing it with the Emergency Services Property Levy (ESPL), which will be paid alongside local council rates

CGU welcomes this decision as a positive change for our customers. Emergency services are available to the whole community, and we agree that it's fairer for all property owners, including those who are not insured, to contribute to the new EPSL.

In the current financial year ending June 30 2017, insurers must still contribute their full ESL obligations. However, any insurance policy in NSW with a start or renewal date on or after 1 July 2017 will not include an Emergency Services Levy.

For more information about what’s changing, please visit the NSW Emergency Services website.

What does this mean for you?

By 1 July 2017, the ESL rate across our products will be reduced down to 0%.

In the future the NSW Emergency Services will be funded by all NSW property owners. This will make it a fairer system as responsibility of funding our important fire and emergency services will no longer fall only on those with insurance. Until this happens you will pay ESL as part of insurance premiums.

  • Will the cost of my insurance premium fall?

    There are many factors that influence insurance premiums but most CGU Insurance home, contents and business customers in NSW should see a fall in the cost of their total insurance premium when the ESL is removed.

  • Does the removal of the ESL mean that my premium will be cheaper next year?

    Once ESL has been removed, it will no longer be charged on your policy. This may lead to your premium being lower next year.

    However, there may be a number of factors that could cause premiums to change, such as changes to your risk and coverage.

  • How do I know how much ESL I'm paying?

    ESL is charged as a percentage of your insurance premium, with different percentages for different types of property and motor insurance policies. The ESL amount paid can be found on your new business and renewal policy schedule for motor, home, contents and business policies.

  • What do I get for paying the ESL?

    Fire and emergency services are an important part of making our community safer. By contributing part of your insurance premiums to the Emergency Services, you are helping to fund a significant portion of these services in NSW.

  • Does this affect all insurers?

    Yes, this is a NSW Government reform that affects all insurers operating in NSW.

  • Will I get a refund on ESL if I cancel my policy?

    There's currently no change to the way that ESL is treated at policy cancellation. If a policy is cancelled, you will be refunded the rest of your insurance years portion of the premium including a pro-rata ESL component. We will continue to review this for commercial intermediated business over the next few months.

  • Will I be paying the ESL twice? If I have paid ESL through my insurance, will I then have to pay through my council rates too?

    You're not paying ESL twice.

    The ESL collected with your current insurance policy will go towards funding Emergency Services for this financial year (2016/2017).

    The new Emergency Services Property Levy paid alongside your council rates will provide funding for Emergency Services for the 2017/2018 financial year.

  • My policy runs from September 2016 to September 2017 and the ESL charge is for the full 12 months. Why don't I get a reduction, or why isn't my ESL charge pro rata to 1 July 2017?

    For the policy you purchased, the insurance premium is for the 12 months ahead from the date the policy is taken or renewed, whereas the ESL charge is for the 2016/17 FY only. Therefore, whenever you buy or renew an insurance policy in the 2016/17 FY your premium includes the ESL amount for that financial year only. This means that everyone pays the full ESL amount, it is just those that pay later in the financial year get a little longer to pay their share.

  • Do you charge the same ESL rate across the year or why are customers in the second half of the transition year paying a lower ESL rate?

    In a normal financial year, we charge a relatively flat ESL rate based on our estimate of the number of policyholders to ensure we meet our obligations to the NSW Government.

    In this transition year, we are still required to collect enough funds for the financial year though we are conscious of the budgeting impact on those customers renewing/purchasing a policy closer to the end of the financial year, where they'll pay their FY17 ESL contribution through their insurance policy and then pay their FY18 ESL in their council rates a very short time later.

    To ensure a fair outcome for all customers, we're using a moderate tapering approach that incrementally reduces the ESL rate throughout the financial year. This is a standard industry practice and we've provided the ESL Monitor with our tapering approach to ensure transparency.

  • What does the removal of ESL on insurance mean for me?

    By 1 July 2017, the ESL rate across our products will be reduced down to 0%.

    In the future the NSW Emergency Services will be funded by all NSW property owners. This will make it a fairer system as responsibility of funding our important fire and emergency services will no longer fall only on those with insurance. Until this happens you'll pay ESL as part of insurance premiums.

  • How is the ESL calculated?

    The total amount needed to fund fire and emergency services is decided annually by the NSW Government.

    Their budgets are set each financial year, which determines the total amount insurers must pay. Each insurer calculates their ESL contribution based on an estimate of their own market share, which is adjusted after the end of each financial year. Insurers pass on the cost of their ESL contribution as part of customer’s insurance premiums.

  • Why is the NSW government changing how NSW fire and emergency services is funded?

    The NSW Government believes that a property based levy is a fairer and more sustainable approach to funding fire and emergency services. The change will also be positive for our customers as these important services will now be funded by all NSW property owners.

    Fire and Emergency services are available to everyone in NSW, so it makes sense that every property owner in the state should contribute to the costs, not just those with insurance policies.

  • If I make an amendment to my policy mid-term, will it impact the amount of ESL charged?

    Yes. An amendment that changes your premium will also result in a change in the ESL amount charged or refunded.

    Post 1 July 2017 we'll no longer charge any additional ESL for changes that result in extra premiums. We'll continue to refund ESL on a pro-rata basis at the rate it was charged for transactions that result in a refund.

  • How have I been notified of this process?

    Customers, who have purchased a new business insurance or renewed their cover, have received a letter outlining the change, along with links to websites where they can find more information.

  • What is the complaints process?

    Please escalate complaints through the current customer complaints handling and escalation process.

Need more information?

For more information about the NSW Emergency Services Levy and your CGU insurance policy, please contact us on 13 24 81, or speak to your insurance adviser.