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Insurers press NSW to drop Emergency Services Levy on premiums

The Emergency Services Levy adds around 18% to home insurance premiums in NSW, and insurers say removing it could lead about 320,000 more households to take out contents cover.

Reported · Written up by our desk · Industry & Deals

The Insurance Council of Australia (ICA) has urged NSW lawmakers to remove the Emergency Services Levy (ESL), saying the tax is inflating insurance costs for families and businesses.

The ICA told a public hearing on 8 September 2026 that the ESL adds about 18% to the average home insurance premium and 34% for businesses, and that the levy generates AUD 1.4 billion annually. The council said households pay an estimated AUD 308 a year in hidden charges on their insurance bill, while flood-hit towns such as Lismore can see typical households paying around AUD 740.

ICA argued the pricing effect contributes to a protection gap, noting that more than 1.1 million NSW households have no contents insurance at all. It said removing the levy from insurance would make cover more affordable and could see an estimated 320,000 households take out contents insurance.

The ICA also presented modelling from Lateral Economics suggesting most households would be better off under a property-based levy even after any replacement charge, with the average household ahead by about AUD 55 a year. ICA said shifting the levy onto property would cut the economic damage from the current system by almost 80% and deliver benefits to the NSW economy of AUD 317 to 460 million per year, with small businesses facing the biggest relative gains.

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