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  • #984212
    CG
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    From 1 July 2013 the fire services levy is no longer to be added to insurance premiums but to be collected with council rates.

    Has any Victorian member who pays their commercial business and/or business insurance premiums monthly had any success in getting them adjusted downwards from 1 July to take account of this change? Or do the insurance companies take the view that your existing policy is normally paid annually in full in advance, and they are simply doing you a favour in allowing you to spread the cost with monthly premium payments, in which case they have no obligation to make an adjustment?

    If that is so, it seems to me those businesses on commercial leases required to pay council rates on behalf of the owner will be paying the fire levy twice over until current insurance policies expire.

    #1146458
    JacquiPryor
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    Hi CG,

    I too would be interested to see an answer on this – and, not necessarily just regarding business insurance. The same would be true for residential – i.e. I pay insurance on my house, and I also pay rates.. I can tell you that I pay my home insurance monthly and have not seen any reduction in this month’s payment. Contacting the insurance company is actually on my to do list for next week to see what they have to say about it… I would have thought even if your premium is calculated at the beginning of a 12 month period, it should be adjusted when something like this (a major change) occurs?

    #1146459
    alliedib
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    I did see something from an insurer as to why the FSL wasn’t being returned. I will see if I can find it and let you know. I do know that they had been reducing the FSL for policies renewed/incepted as the months ticked down to July 1.

    Regards,

    Mark

    #1146460
    CG
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    Looks as though we are stuck with Fire Services Levy on the remaining monthly premiums for any policy taken our before the end of June 2013.

    I asked this question on Whirlpool and a very helpful poster referred me to the Fire Services Levy Monitor site. See especially Guideline 3 on p. 21 of the first document on this link http://www.firelevymonitor.vic.gov.au/home/news+and+publications/guidelines+for+insurance+companies+issued
    Guideline 3:
    The fire services levy will no longer constitute a valid component of a price for a new or renewed contract of insurance issued from 1 July 2013.
    However, for policies issued prior to 1 July 2013, monthly instalment payments of premium continuing after 30 June 2013 may continue to include an FSL component..

    Although it says ‘may’ you can be sure the insurers will continue to include it.

    #1146461
    Andrew155
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    CG, you are correct.

    As an insurance broker, I know that insurers typically will not refund any FSL already paid or for policies which began before FSL being abolished.

    Any insurance companies that charges FSL in Victoria from 1 July or attempts to hike their premium to take advantage of the discount from nil FSL will constitute to a compliance breach.

    #1146462
    CG
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    Thanks for the corroboration, Andrew.

    What I don’t understand is why – given that the companies knew that this change was coming in – the amount for fire services levy was not required to be reduced pro rata on policies taken out earlier in the 2012-13 year. For example, reduced by 50% already on a policy taken out on 1 January 2013.

    #1146463
    alliedib
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    CG,

    Many insurers began reducing the rates of FSL in the latter half on 2012 to reflect the fact that there would be no FSL from 1st July. Some insurers were also not applying FSL to new/renewing policies from up to 2 months before the 1st July.

    Perhaps consider it this way – if you have a policy that fell due on January 1 – instead of calculating FSL as 36% (as an example) for 6 months the insurer charges 18% for 12 months… you still are paying the FSL over the whole policy but the amount charged reflects the 6 months of 36% FSL.

    And from what I am aware the FSL will only be refunded following the disposal of an asset, not simply if you decide to cancel the policy.

    I hope this goes some way to explaining the situation.

    Regards,

    Mark

    #1146464
    Andrew155
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    CG, post: 168226 wrote:
    Thanks for the corroboration, Andrew.

    What I don’t understand is why – given that the companies knew that this change was coming in – the amount for fire services levy was not required to be reduced pro rata on policies taken out earlier in the 2012-13 year. For example, reduced by 50% already on a policy taken out on 1 January 2013.

    I suspect this is Government mandated rather than on the part of insurers. They do not benefit at all from collecting FSL; 100% of it goes towards the State so there’s no real incentive for them to collect when they don’t need to.

    Your real insurance costs consist of the following:

    Actual Premium
    The real cost of insurance charged by the insurer.

    Terrorism Premium
    Poorly publicised mandatory premium present in all insurance products. Implemented post-September 11 attacks, this premium goes towards a Government pool of billions to be paid out in the event of a terrorist attack, which insurance does not cover.

    GST
    Standard goods and services tax, typically 10% of Actual Premium

    FSL
    As of writing, it is currently defunct in most (but not all) Australian states. Unfortunately, GST applies to this levy (think of it as tax on top of tax!)

    Stamp Duty
    Standard stamp duty tax, a percentage of Actual Premium based on which state you live in.

    As you can see, the Government takes a significant chunk of your insurance payments and can have significant influence over the price paid and how things like FSL work.

    #1146465
    CG
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    Thanks again Andrew, and Mark.

    I need to have a close look at last year’s premiums & compare them with this year’s to see to what extent, if any, the fire services levy has been abated. My initial impression is that neither AAMI (building) or CGU (business) were not among the ‘many’ that Mark says did so, but I could be wrong.

    But even if not useful in saving me money now, this thread has shown me the value of getting quotes though a broker rather than blindly renewing next time.

    #1146466
    alliedib
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    Hi CG,

    Actually CGU is one of the insurers I was talking about – here is the timeline that they provided to me:

    Key dates in the transition
    October 2012 – CGU began reducing FSL rates and passing the saving onto customers.
    27 April 2013 – New and renewing CGU policies contain zero FSL from this date.
    1 July 2013 – The new system begins. Local councils will begin collecting the new levy from this date.

    I have requested some more information from CGU as it is always handy to be able to demystify the workings of insurers… if you contact me (PM will be fine or give me a call) I can get your email address and forward it to you once received from them.

    Regards,

    Mark

    #1146467
    Anonymous
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    I think insurance companies SHOULD be made to publicly show how they constitute their prices…, my private premiums have not gone down they have gone up.
    IE they should have to show exactly where the money in this premium goes and how much as in the actual dollar figure amounts.

    I have seen in the space of 4 yrs an insurance premium go from $4000 to $32000, the size of the company didnt change but the premiums went up alot more than just CPI…

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