Increased Fire Service Tax – 1 July 2017

In New Zealand, the firefighting services are funded by the Fire Service Levy (FSL) on insurance policy holders. This compulsory Levy is added to the insurance premiums for personal and commercial property, motor vehicles, contract works and other insurance policies.

The Government is currently undertaking a consultation process that will result in a merger of the Urban and Rural Fire Services. The new service comes into effect on July 1, 2017, but will take 3 years to become fully integrated.

The Government says they expect the merger will bring about operational savings and enable the Fire Service to better handle the broader types of emergencies that have become their responsibility in recent years.

How will this affect the insurance buyer?

The cost of merging the urban and rural fire brigades has been reported by Minister Peter Dunne to be $303 million. Levy payers are to fund $263 million of this through increased Fire Service Levies and the Levy on insurance policies will be increased by 40% from 1 July 2017.

The new Levy rates effective 1 July are as follows:


The new rate is 10.6c per $100 insured (capped at $100,000 for buildings and $20,000 for contents) meaning a maximum increase of $30 for buildings from $76 to $106, and a maximum increase of $6 for contents from $15.20 to $21.20.


The new rate is 10.6c per $100 insured. This has the potential to significantly increase the levy payable for those with higher sums insured, as the FSL rate is effectively increasing by 39%.

Motor Vehicles and Boat Trailers (less than 3.5 tonne)

The new flat rate is $8.45 which is an increase of $2.37.

Motor Vehicles and Boat Trailers (over 3.5 tonne)

The new rate is 10.6c which is charged as a percentage of the sum insured i.e. $200,000 x 0.106% = $212.00.


The new rate is 10.6c and this is charged as a percentage of the boat sum insured i.e. $50,000 x 0.106% = $53.00.

More changes in the future?

Depending on the outcome of the consultation process, from December 2018 the way the FSL is calculated is likely to change.

It is proposed that the Levy will apply to more insurance policies and property types. For example, the aircraft and helicopters operated within New Zealand are exempt for levies under the current regime but in future they may not be.

The Government have also suggested the charge will be on total sum insured, not the indemnity value which will have a much larger impact on the cost to the insurance buyer. The impact of these future changes will not be fully known until the consultation process is complete and the new legislation has been prepared.

Austinsure and the wider insurance broking community are concerned that these changes will incur extra insurance costs for our clients.

We believe the method of charging the levies is inequitable and the increases will act as a disincentive to insure.

It’s unfair that people with insurance are expected to pay for the fire service when the fire service helps everybody, including those who are uninsured. The fire service doesn’t go around asking are you insured? They help everybody because that’s what the community expects, but the people that pay for that are the prudent people that are insured.

We’ll continue to monitor the proposed changes as information comes to hand.

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