Removal of the Victorian Fire Services Levy (FSL)

Removal of the Victorian Fire Services Levy (FSL) From Your Insurance Premiums


We are pleased to inform you that insurance policies issued or renewed from 1 July 2013 and covering property in Victoria do not include any Victorian Fire Services Levy (FSL) charges.

This is because the Victorian Government has changed the way the fire services in the state are funded, switching from a levy on insurers – passed through to you as part of your insurance premium – to a property levy collected directly from property owners through their council rates. This is designed to make the funding of this very important community service more fair and efficient.

Q1. How does this change affect my insurance policy?
Q2. How does this affect my insurance premiums?

Q3. So if I paid 30% FSL last year, my total premium when I next renew will be 30% lower?

Q4. I have a Pay-by-the-Month policy. Will FSL still be included in my monthly payments from 1 July?

Q5. Am I able to claim a pro-rata refund of the FSL on the period of my existing policy that goes beyond 1 July 2013?

Q1. How does this change affect my insurance policy?

This does not change the coverage of your insurance policy. FSL will no longer be charged on your premium on renewal or inception of new policies, – instead, a property based levy will fund the Victorian Fire Services directly through property owners’ council rates.

Q2. How does this affect my insurance premiums?

In simple terms, removing the FSL component of your insurance premium on renewal or inception of new policies reduces the cost of insuring your home and contents in Victoria.

The example in the table below gives you an idea of the sort of difference the removal of FSL makes to a home insurance premium. Please note that there are many factors that may shift your base premium (premium before applying any FSL and Government charges such as GST and Stamp Duty) up or down in any given year, such as increased sums insured, our claims costs, new and more accurate natural hazard data, reinsurance costs and building replacement costs.

A 10% increase ($100) on previous year’s base premium has been used (for reasons noted above) to illustrate savings from the removal of FSL. Removing the FSL also results in savings of GST and Stamp Duty on that FSL charge. The net savings on the total renewal premium are therefore $242.00.

 

Premium before 1 July 2013

Renewal from 1 July 2013

 

Rate

Premium

Rate

Premium

Annual Base Premium

 

$1,000.00

 

$1,100.00

FSL

30%

$300.00

0%

Nil

GST

10%

$130.00

10%

$110.00

Stamp Duty

10%

$143.40

10%

$121.00

Total Premium

 

$1,573.00

 

$1,331.00

Net Savings: $242.00

Note: The rate of FSL previously paid varies according to the address of the property and the date the policy was bought or renewed. The rate of FSL above and the 10% increase in base premium year-on-year are examples only for illustrative purposes and assumes no changes have been made to the policy mid term that affects the base premium.

Q3. So if I paid 30% FSL last year, my total premium when I next renew will be 30% lower?

Not quite. First, the 30% figure is what was added to the base premium, not a percentage of the total premium. But as the example above shows, you will not pay any FSL charges, also saving you GST and Stamp Duty on those FSL charges.

Secondly, there are many other factors that may shift your base premium up or down in any given year, such as changes to sums insured, our claims costs, new and more accurate natural hazard data, reinsurance premiums and building replacement costs. In the table above, we increased the base premium by $100 (or 10%) purely for the purposes of this example.

Q4. I have a Pay-by-the-Month policy. Will FSL still be included in my monthly payments from 1 July?

If there was an FSL component in your policy when it was issued or renewed prior to 1 July 2013, you do have to pay FSL in any remaining payments until the policy expires or you next renew. The FSL is only removed from policies issued or renewed from 1 July 2013.

Q5. Am I able to claim a pro-rata refund of the FSL on the period of my existing policy that goes beyond 1 July 2013?

The FSL is only removed from policies issued or renewed from 1 July 2013. If your policy was issued or renewed before then and there was an FSL component, then you are not entitled to a refund. Our final contribution to the Victorian Fire Services is based on premiums we collect from customers during the 2012-2013 financial year, regardless of when the policy was taken out or renewed.





 

 

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