Fire Services Levy
In some Australian states, we are required by law to contribute to the annual budget for fire services. The relevant authority in these States determines the amount of our mandatory contribution. It is calculated on our percentage share of the premium income received by all insurers for particular classes of insurance cover, in the preceding financial year.
Each year, we calculate what our mandatory contribution is likely to be for the following financial year, so that we can proportionately pass the cost on to you and to all of our other insureds, who have the classes of insurance policies on which we have to pay this mandatory contribution. In this way, we can collect the funds we need to pay our contribution, when it falls due.
We pass the cost of our contribution on to you as a levy which we charge on the premium you pay on the particular class of insurance policies on which our contribution is calculated. We call this the "Fire Services Levy" (FSL).
Any FSL you are charged is based on detailed forward estimates which we prepare of our total premium income for the particular classes of policies which are affected, for the relevant financial year. We do not know our mandatory contribution in advance and therefore cannot determine precisely what amount we need to allocate to each policy which is affected, at the time each premium is payable. By necessity, the FSL we charge on any policy is therefore an estimate. This means the total amount we collect as a FSL from all our insureds, may in some cases exceed the actual amount of the fire services contribution, which we are required to pay to the relevant State authorities.
If the amount we collect in a given period from all our insureds exceeds the amount we are required to pay to the relevant State authority, we are not required and nor do we repay any excess to you. Similarly, we do not ask you to pay any extra to us, if we did not collect enough to cover the total cost of our mandatory contribution in a given period.
If we include in any of your policies an amount to take into account our estimated obligation to pay our mandatory contribution, we will show the amount as an item called ‘Fire Services Levy’, in the ‘Total Amount Payable’ on your certificate of insurance.
