Insurance taxes to be cut
The NSW Independent Pricing and Regulatory Tribunal’s (IPART) recommendation to reduce insurance taxes has met with strong support from the insurance industry.
Allianz general manager of corporate affairs Nicholas Scofield said Allianz had always felt that a tax as inefficient as the Fire Services Levy (FSL) would not survive the scrutiny of a body like IPART.
“It is only a quirk of history combined with bureaucratic inaction and a lack of political will that could see the FSL on insurance survive into the 20th centaury let alone the 21st,” he said.
“Total taxes on property insurance in NSW resulting from the cumulative effect of FSL, GST and stamp duty are around 50 per cent or so. So on a base insurance premium of, say, $1000 for building and contents, additional taxes of around $500 are levied on top.”
According to Scofield, thanks to the FSL, Australia has some of the highest insurance taxes in the world and high levels of non-insurance and underinsurance.
“The horrendous levels of taxation on insurance, due to the combined effect of the FSL, GST and stamp duty, see insurance taxes keeping company with the so-called sin taxes on things like tobacco, alcohol and gambling. Yet insurance is a social good.”
Scofield said it was pleasing to see IPART recognising the folly of insurance taxes in general by also recommending that stamp duty on insurance be reduced.
Recommended for you
The Federal Court has dismissed a conflicted remuneration case brought by ASIC against the director of life insurance distributor Freedom Group, where Bali holidays and Vespa purchases were among sales incentives.
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
