The Government’s decision to set levy increases at a lower rate to fund fire and emergency services will provide some relief to New Zealanders struggling with the cost of living crisis, the Insurance Council of New Zealand (ICNZ) says.
Earlier this year, Fire and Emergency New Zealand (FENZ) had publicly consulted on a 5.2% hike from July 2026, on top of a hike of 12.8% in July this year. The rate increase was revised downwards to 2.2% after the Minister of Minister of Internal Affairs, Brooke van Welden expressed doubt that the initial increase was justified.
The Government also lowered a proposed flat charge on vehicle insurance from $40.12 to $25. Currently, the levy sits at $9.53. The Minister has also asked FENZ to deliver savings of $60 million by the end of the three-year period.
“We welcome the Minister’s decision to set levy increases at a lower rate after asking FENZ to have another look at the proposed levy increases,” ICNZ chief executive Kris Faafoi said.
“We know that New Zealanders are finding it tough dealing with the cost-of-living crisis and we support the Government’s move to ensure Kiwi’s don’t pay anything more than they have to.
“We acknowledge the important work that FENZ does in responding to fire and other emergencies and promoting safety. FENZ’s funding comes almost entirely from levies added to insurance policies covering property and motor vehicles.
“The Government has struck the right balance between FENZ having the appropriate resources to do their job while ensuring that the funding via insurance premiums is affordable and sustainable.
“Insurance premiums are driven by a number of factors, some of which are out of our control such as reinsurance rates and taxes and levies. Insurers are looking at ways to help their customers manage their cover as cost-effectively as possible.
“We have previously expressed our concern about the ongoing sustainability of FENZ funding as it is only funded from those who purchase insurance. If fewer New Zealanders take out insurance, then FENZ funding will reduce, requiring levies on insurance to increase further and making insurance even less affordable.
“The insurance Industry will be working with both the Department of Internal Affairs and FENZ over the coming months to work through some of the details of the levy applications to insured property. “We want to ensure the changes can be implemented easily in the time frames set down by the Government and in a cost effective way that doesn’t add to the regulatory burden which will ultimately be borne by New Zealanders,” Kris Faafoi said.
