News & Insurance Updates
What The Increases in EQC and FSL Levies Mean For You
14 September 2017 - Youi New Zealand
If you're a policyholder, you're probably used to monitoring your premiums and making sure you understand exactly where your money is going. Part of your premium includes levies that your insurer passes on to governing bodies to help fund emergencies and disasters that could impact you. Sometimes these levies change, and when they do, it helps to know where the change is coming from and what it means for you.
Recently, two increases in levies were announced: An increase in the Earthquake Commission Levy, and an increase in the Fire Service Levy. You will see these increases reflected on your next renewal notice, and when you do, it might raise a few questions, such as...
Why am I seeing an increase in my EQC Levy?
In May 2017, the New Zealand Government announced an increase to the EQC levy - which is a premium that all house and/or contents or car insurance policyholders pay to their private insurers. The insurer then passes this payment on to the Earthquake Commission to help provide insurance cover and financial assistance to New Zealanders following natural disasters.
Starting 1 November, the premium will raise from 15 cents to 20 cents per $100 of cover.
The reason for the increase is that the current rate of 15 cents is below the long-term break-even costs of running the National Disaster Fund, particularly after the effect of recent earthquakes. The scheme now needs to be rebuilt which is what the increase will be put towards.
Why am I seeing an increase in my FSL Levy?
Another change that has already come into effect is an increase in the Fire Service Levy by a maximum of $30 for Building cover and $6 for Contents cover. This increase was effective as of 1 July 2017 and was set by the New Zealand Fire Service Commission to help facilitate a more streamlined fire and emergency services across New Zealand.
Where is my money going?
The increase in these levies will be passed on directly to the respective bodies; the Earthquake Commission and the New Zealand Fire Service Commission, who will use the funds to pay for their annual operating costs, which include settling claims arising from natural disasters, researching natural disasters, educating the public on preparing for natural disasters and meeting the costs and services that arise from large-scale natural disasters such as the recent Canterbury and Kaikoura earthquakes.
The rise in the FSL Levy in particular will help fund the creation of the Fire and Emergency New Zealand (FENZ) organisation which is the amalgamation of The New Zealand Fire Service, National Rural Fire Authority and 38 rural fire authorities. According to the New Zealand Fire Service Commission, this new organisation will bring 626 operational units and 14,000 firefighters and support staff together to create a "unified service that can adapt as the risk and needs across our communities change."
What do these changes mean for me?
If you are the policyholder of a home, contents or car policy then you will see an increase in your EQC levy and your FSL levy on your next policy renewal document.
For your EQCover Premium, you can expect to see a 5 cent increase for every $100 of cover, up to a maximum increase of $50 (excluding GST) per building and $10 (excluding GST) for Contents cover. For example, insured householders will pay a maximum of $240 (excluding GST) a year which is up from the current maximum of $180 (excluding GST).
For your FSL Levy, you will see an increase of up to $30 for Building cover and $6 for Contents cover. GST will then be added to this levy. All Car, Motorcycle, Trailer & Caravan policies will have a Fire Services Levy amount of $8.45 (excluding GST).
When will I see these changes?
Look for these changes on your next policy renewal documents, or for more information on the increased EQC premium please click here