The National Insurance Brokers Association (NIBA) has issued a “Discussion Paper,” outlining the reasons for its opposition to the high taxes imposed on insurance transactions in Australia.
The NIBA is the country’s independent industry association, which represents 500 insurance brokerage firms and more than 2600 individual brokers, who handle nearly 90 percent of the commercial insurance transacted in the country.
The NIBA pointed out that “insurance brokers play a major role in insurance distribution, handling $10 billion [US $7.522 billion] in premiums annually and placing around half of Australia’s total insurance business.”
The association has long been an outspoken opponent of insurance taxes in Australia. It has campaigned for the abolition of state-based fire services levies (FSL), stamp duties and other taxes that serve to discourage the purchase of insurance coverage in the community.
“Such taxes are a disincentive to people and businesses to insure their property at prudent levels, or indeed to insure them at all,” wrote NIBA Chief Executive Noel Petersen in his introduction to the discussion paper.
“This paper explains why there is a need for reform to the way in which tax is imposed on many insurance premiums,” he continued. “State governments – particularly New South Wales and Victoria – continue to exploit insurance as a convenient and low-profile way to extract millions of dollars from people and individuals who simply want to protect their property.”
Petersen also noted that “over the past decade a royal commission, two state governments’ reviews and a number of commissioned studies have acknowledged the link between insurance taxes and the alarmingly high incidence of underinsurance and – even worse – non-insurance in the Australian community.
“The disastrous February 2009 bushfires in Victoria have revealed as many as 30 percent of those who lost their homes had no insurance at all. We expect the royal commission investigating the fires will find – as has been established after similar disasters elsewhere – that affordability was a major factor in people’s decision not to insure.
“For individual Australians, the loss of their property through natural or man-made causes can be devastating. Without adequate levels of insurance to fall back on, a business is unlikely to ever reopen its doors and a family risks losing everything – their financial security, their home and sometimes their livelihood.”
The paper focuses on the “three or four taxes heaped” on premium payments. According to the NIBA, without these burdensome levies “home and contents insurance would be easily affordable for every Australian.”
Petersen pointed out that “it has reached the stage where insurance is taxed at the same or even higher levels as the so-called ‘sin taxes’ – alcohol, tobacco and gambling.”
Reform is desperately needed,” he continued, “but reform won’t come until the community understands the problem and demands change.”
The NIBA has therefore presented its discussion paper, “to assist in the drive to raise community awareness of the impacts and alternatives to insurance taxes.”
The full text of the discussion paper may be obtained on the NIBA web site at: http://www.niba.com.au/tax/resource/Tax_Discussion_Paper_May09.pdf .
Source: National Insurance Brokers Association (Australia) – www.niba.com.au
Was this article valuable?
Here are more articles you may enjoy.
Wildfires Are Upending Some of the Safest Bets on Wall Street 
Vintage Ferrari Owners’ Favorite Mechanic Charged With Theft, Fraud 
Harvard Study Again Stirs the Pot on Demotech Ratings of Florida Carriers 
USAA to Lay Off 220 Employees 
