Major increases in taxes and levies on people who insure their homes could see low income households not able to protect themselves from disasters the Insurance Council of New Zealand said today. “By the end of this year households will see the levies and taxes on people who insure themselves sky rocket.  From 1 July there will be a 40% increase in the levy used to fund the fire service which everyone benefits from, not just the insured” Insurance Council Chief Executive Tim Grafton said. From 1 November there will be a 33% increase in the EQC levy applied to house insurance.  And both these levies then have 15% GST applied to them. This means people with house and contents insurance will be levied and taxed over $450 without even counting the 15% GST applied to the premium that the insurer charges. New Zealand is one of the most vulnerable countries in the world to natural disasters for its size.  Insurance is vital in providing protection for people as we have seen with the industry likely to pay $25 billion for the Canterbury and Kaikoura earthquakes. Grafton said “This election year there is an opportunity for political leadership to be shown.  Does New Zealand continue to go down the path of making it increasingly difficult for low income people to protect themselves or should we really be addressing our vulnerability?” “If fewer people insure that will not only put upward pressure on the cost of insurance and so create a downward spiral, but it will also create a moral hazard for the Government.  Does it help the uninsured and thereby encourage greater levels of non-insurance and under-insurance?” he said. “General taxation should fund the Fire Service which benefits everyone, insured and uninsured alike.  The Crown balance sheet is now strong and can bear the $1.75 billion exposure that the EQC levy seeks to fund. “Crown risks to the likes of foot and mouth disease and pandemics are not specifically funded.  The challenge to future governments is to think how we can keep people protected from natural disasters.   All the evidence points to insurance as critical to economic and social recovery post-disaster. Research commissioned by ICNZ shows only 25% of New Zealanders agree that New Zealand is well prepared to minimise the economic and social costs of natural disasters.