Government welcomes NSW insurance price reforms

Australian Treasury

The Albanese government welcomes the announcement by the NSW Premier to reform the emergency services levy.

The ESL makes up a significant portion of home and contents insurance costs for households and businesses in NSW. At a time where insurance costs are increasing nationally, this reform will come as a huge cost of living relief, particularly for those in disaster‑prone areas.

The Albanese government is focussed on improving insurance affordability. This “grudge purchase” now makes up a large portion of the weekly budget and we are doing what we can to alleviate this cost of living pressure.

The ESL accounts for about 18 per cent of the cost of insurance for households in NSW, and about 30 per cent for businesses.

This makes insurance affordability issues particularly acute in the state, which has experienced several severe flood events in recent years.

More and more people are being priced out of insurance. We’ve seen the protection gap consistently grow, which means less people are protected if the worst strikes. This is despite floods, fires, and cyclone events rising in frequency and intensity.

This year, the Actuaries Institute estimated that insurance costs went up by more than 50 per cent on average for people in high risk areas. The Institute also found that about 250,000 people experienced ‘insurance stress’, meaning the cost of insurance was higher than 4 weeks rent.

In July, the government announced a parliamentary inquiry into insurer responses to the 2022 floods. The Inquiry will take a whole of economy view, considering land use planning, skills shortages, affordability, and claims handling.

Quotes attributable to the Assistant Treasurer and Minister for Financial Services, Stephen Jones:

“It is great to see this announcement from Premier Minns today. The removal of the ESL from insurance policies is an excellent decision and a long overdue reform. It will come as a huge relief for households and businesses in NSW feeling the crunch of cost of living pressures.”

“Floods and fires driven by extreme weather are hitting harder and more often.”

“We want people to be able to protect their assets when the worst strikes, but high insurance costs mean more and more people simply can’t afford it.”

“Australians finally have a Government that is switched on to their problems, and we will continue to work with states and territories to work on solutions.

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