NSW Emergency Services Levy Inquiry: Insurance Council Welcomes Reform Push

Sydney, Australia – February 15, 2026 – The Insurance Council of Australia (ICA) has welcomed a new parliamentary inquiry into New South Wales’ Emergency Services Levy (ESL), a tax levied on insurance customers to fund the state’s emergency services. The inquiry, announced by Treasurer Daniel Mookhey, represents a significant step towards addressing what the ICA describes as an unfair and unsustainable system.

Currently, New South Wales is unique among mainland Australian states in funding its emergency services through a tax on insurance premiums. This levy added approximately $1.3 billion to the cost of insurance for NSW customers in the 2024-25 financial year, according to the ICA. The system has come under increasing scrutiny for disproportionately impacting homeowners and businesses facing higher extreme weather risks, and higher insurance premiums.

The ESL is calculated as a proportion of premium costs, meaning those at greatest risk – and therefore paying more for insurance – also bear a heavier tax burden. This creates a regressive effect, impacting households with limited financial capacity. Data cited by the ICA reveals that around 70% of households exposed to the highest levels of flood risk reside in areas where median incomes fall below the national average, with approximately 35% living in areas below the poverty line.

The parliamentary inquiry is expected to explore alternative funding models for emergency services, aiming to alleviate the financial strain on insurance customers while ensuring the continued sustainability of emergency service funding. The ICA has long advocated for the abolition of the ESL, arguing that it penalizes responsible insurance holders and exacerbates affordability issues, particularly in a climate of increasing extreme weather events.

“The announcement today by Treasurer Daniel Mookhey is an important next step toward fairer emergency services funding in New South Wales,” said Andrew Hall, CEO of the Insurance Council of Australia. “The current system has repeatedly been found by multiple independent reviews to be unfair and unsustainable. We’re committed to working with the Government and Parliament to develop a model that improves affordability while sustainably funding emergency services.”

The existing ESL structure adds roughly 18% to the cost of residential insurance and around 34% to commercial premiums, according to a November 16, 2023 statement from the ICA. This places a significant financial burden on businesses and homeowners, particularly as insurance costs continue to rise due to the increasing frequency and severity of natural disasters. New South Wales insurance customers pay approximately three times the amount of state taxes compared to their counterparts in Victoria.

The NSW government’s commitment to reform follows the establishment of a Stakeholder Reference Group in March 2024, chaired by Treasurer Mookhey. This group, comprised of representatives from the insurance industry, local government, property councils, real estate institutes, and emergency service organizations, is tasked with advising the government on the development of a new funding model. The government plans to release a consultation paper later this month to solicit public input on potential reforms.

The move towards ESL reform aligns with a broader trend across Australia. All other mainland states have either removed similar levies or are actively pursuing reforms. Tasmania is currently reviewing its levy, which applies only to commercial insurance. The ICA has campaigned for over a decade to remove the ESL, highlighting its detrimental impact on insurance affordability and its inequitable distribution of costs.

The ICA’s call for reform is underpinned by research indicating strong public support for alternative funding models. A survey conducted prior to the March state election revealed that 65% of New South Wales voters support removing the ESL and replacing it with a more equitable system. The previous government’s attempt at reform in 2017 failed, resulting in insurance customers paying an additional $5.6 billion in ESL since then.

The parliamentary inquiry represents a renewed opportunity to address these concerns and establish a more sustainable and equitable funding model for emergency services in New South Wales. The ICA emphasized its commitment to engaging constructively in the inquiry process to ensure that the reforms deliver positive outcomes for households and businesses across the state. The outcome of the inquiry will be closely watched by the insurance industry and consumers alike, as it has the potential to significantly impact the cost and accessibility of insurance in New South Wales.

The ICA also noted the allocation of $4.2 billion, in partnership with the Federal Government, to support recovery efforts, including $63 million for land development and relocations in the Northern Rivers region, as a positive step alongside the ESL reform efforts.