Here is the response from the ESL Insurance Monitor – In response to your first few points, here is some more information about the charging of the levy this financial year and next: An ESL/ FSL charge is triggered when an insurance policy is renewed or commenced at any point in the 2016-17 financial year. It is an annual fee which relates to the insurance company’s funding of emergency services for the same financial year, and is not tied to the life of an insurance policy. An insurance company that receives a premium during 2016-17 is obligated to pay a contribution towards the funding of the emergency services for that financial year. The obligation is based on the entire amount of the premium received – not just the portion that relates to the 2016-17 financial year. Therefore, insurers will set an ESL charge on a policy to reflect this full year obligation, regardless of whether the insurance cover falls into one or two financial years.
The property-based levy, which is to be charged alongside council rates from 1 July 2017, will fund the emergency services for the 2017-18 financial year. As you can see, this funds a different time period to the levy which is charged on insurance premiums. The only way that a policyholder would be ‘double charged’ is if they were to have an ESL included on an insurance policy that commences after 1 July 2017. If that were to happen, the Monitor would like to know.
With regards to your last point about a renewal near the end of the financial year. You are quite right in assuming that if all things remained equal, a policy renewed or commenced on 30 June 2017 would expect to attract the full ESL charge. However, insurance companies have indicated to the Monitor that due to their concerns that policyholders may choose to defer taking out insurance towards the end of the financial year, in an attempt to avoid paying an ESL, they intend to reduce the rates of ESL charged as the end of the scheme approaches. So while the ESL charge is not actually pro-rated, the results of the insurance companies actions may create the appearance of such for those renewing/commencing policies in the last few months of operation.
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