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Market Update - Government Levies

October 2017

 

As you are now likely to be aware, the government has merged the urban and rural firefighting services earlier this year into a new organization. The Fire and Emergency New Zealand now delivers fire and emergency services across the country and the cost of this merger was $303 million. The government is funding this by a 40% increase in the fire service levy which as you know is collected as a tax on insurance protection.

 

We along with others, made submissions to the Government to endeavor to have the levy collected another way instead of the current method of taxing insurances however the Government at this stage has elected to maintain the current method of collection. That said, the current method of collection is temporary and will change again in 2019, although from what we know this change will not reduce the costs for your business and other companies, the fire service levies are more likely to increase.

 

Unfortunately the earthquakes in the last quarter of 2016 and the severe flooding experienced in the first half of this year has had the effect of increasing property insurance pricing for both commercial and domestic insurance buyers. In order to prepare for future disasters, the Earthquake Commission (EQC) levies will increase from 1 November 2017 in order to help rebuild its National Disaster Fund (NDF), which has been depleted following the Christchurch, Seddon and Kaikoura earthquakes. The EQC currently has a government guarantee and $4.7 billion in re-insurance cover, so homeowners will be covered if there is another natural disaster, however they are now starting to look a bit further ahead to build up those funds for future events.

 

Insured homeowners currently pay 15c per $100 of insurance cover, up to a maximum of $150 plus GST for each dwelling unit each a year, as part of their insurance premiums. From 1 November 2017, homeowners will pay 20c per $100 of insurance cover, with an annual cap of $200 plus GST on each dwelling unit, a 33% increase.

 

We thought it was important to keep you up to date with what is currently happening in the insurance market. Should you have any questions about these changes then please do not hesitate to get in contact with your local BWRS Broker.

 

 

ICNZ speaks out on levies (taxes)

Source: Insurance Business

 
The Insurance Council of New Zealand’s (ICNZ) CEO, Tim Grafton, is ramping up his anti-fire levy message with a warning to property owners to watch out at renewal time. Proposed increases are due to kick in on July 01 and the true impact of how that will affect premiums will only start sinking in at renewal time.
 
“I’m sure there are many property owners that have no inkling of what the tax increase is going to be,” he told Insurance Business.
 
“The scale of the increase is pretty ginormous by any stretch of the imagination, when you’re required to pay 40% more, so $30 more on house and another $6 on contents with GST on that as well, so tax on the tax, I think there are pretty serious implications,” he said.
 
“It’s not clear yet how it will play out if you are in an apartment building which is say, 40% residential and 60% commercial, then the insurance on that is commercial insurance and commercial insurance is uncapped with the increase.
 
“That means if you’re in a building that’s worth $10 million then the increase is not $30, it’s $3,000. So six people would pay $300 each or for five people it would be $600 each and then with GST on top of that.”
 
Grafton said it really was ‘serious money’ made all the more substantial at a time when many commercial properties in Wellington had been damaged by the earthquake on November 14.
 
“You do want to retain affordable and accessible insurance and having seen significant increases of this scale is unhelpful in that respect,” he said.
 
Grafton said the key thing was making property owners realise this was not an insurance increase.
 
“It’s an increase in the tax to fund the Fire Service which does far more in terms of non-property protection than anything else and furthermore it’s out of step with international practice,” he explained.
 
“It puts the burden on people who want to insure their property and that enables people to freeload onto the system and that’s not a good thing either.
 
“So really it should be funded from general taxation because it’s for the public good.”
 
Internal Affairs Minister Peter Dunne defended the increase, saying levies hadn’t increase since 2008.
 
The extra funding would address the under-investment in rural fire services and would cover the cost of merging 40 separate organisations into a new national body, he said.
 
Dunne said there had been 75 submissions on the proposed levy rates through a consultation process last year and many were not happy.
 
“The difficulty I’ve got to balance is some of the concerns that have been expressed, and any lessening of the levy income for the new fire and emergency services will compromise their ability to deliver those services,” he told Radio New Zealand.
 
“You know – most people want to go to heaven but few want to die,” he said.
 
At the end of last year, IBANZ and leading brokers were vocal about the alarm they felt by the proposed increases.
 
However, they admitted that raising awareness among the affected policyholders had been ‘a problem’.
 
 
 

It’s Nasty and It’s Real: Cyber Threat!

Did you know, that just recently...

  • A company had its website attacked by hackers who changed the bank account number template for all company invoices to one offshore, and for 3 months substantial client payments went direct to the hackers!
  • Hackers threatened a company that unless a modest ransom was paid to them immediately that they would take down their website. The payment was made and then a greater ransom amount was demanded and was not agreed to. The website was hacked and crashed including all the associated accounting processes and loss of client data.
  • A manager was using Wi-Fi in a café on his business smart phone and the contacts list plus his company banking details were stolen while he accessed the public Wi-Fi.
  • A prominent SUV manufacturer had its software hacked and one vehicle concerned, while being driven, had the brakes applied externally of the driver. All from a remote cell phone. HOW SCARY IS THAT??
  • Even if you back up to a server or cloud, you are still not immune to Cyber attack - as often it is not until you have been attacked and the hackers have all your data, that they make their presence known by then the malware is in your system and therefore also in your back up files!

If you transact business online or in the public domain, use equipment that has software to run it, then you are at risk from these dangerous and skilful terrorists. Make no mistake - no one is immune!

 

There is an insurance solution that goes a long way in indemnifying the business in the event of an attack… it covers:

  • Third Party Liability – related to Privacy, Personal Information, Corporate Information, Media and Social Media, including Defamation, Intellectual Property, Rights and Plagiarism claims.
  • Hacker Theft Cover – Fraudulent or Erroneous Paid Funds.
  • Business Interruption – includes Net Profit and Extra Expenses indemnity as a result of a Network Attack on your Own Network.
  • Costs to Restore – covering the Research, Replacement, Restoration Costs to recollect Software and any Electronic Data due to attack, including Data Forensic and PR Assistance.
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Contact BrokerWeb Risk Services, your local professional insurance broker to discuss protection and real viable insurance solutions.


Related Downloads
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Austbrokers take a 50% shareholding in BrokerWeb Risk Services in New Zealand - Independence Remains (December, 2014)

 

BrokerWeb Risk Services Limited (BWRS), New Zealand largest independent broking house, are pleased to announce that Austbrokers, a leading Australian insurance distribution and specialist underwriting group, have taken a non-controlling partnership shareholding in BWRS.

 

This positive structural involvement, along with the acquisition of the management group for the BrokerWeb cluster group, now results in a New Zealand broking house with $350 million in gross written premium and a combined client base of over 120,000.

 

Such market strength means BWRS is assured of continuing to secure strong support from both local and international insurance markets. This equates to tangible broader insurance protection and competitive premiums for our clients. It also allows for continuous prioritised acquisition expansion plus further synergies and exciting opportunities for sustained organic growth.

 

Board control for BWRS remains with the New Zealand based Directors of CEO David Archer and CFO Carl Hustler and both maintain their current roles.  Austbrokers CEO Mark Searles and their Chief Broking Officer Keith McIvor also join the board to augment the existing professional level of the controlling management executive team.

 

There is no change to the company branding with all businesses involved in the transaction continuing with business as usual but allows leverage support as required from Austbrokers underwriting group services.

 

This positive and meaningful structure going forward ensure BWRS remain the leading INDEPENDENT NEW ZEALAND led and run insurance broking house, providing total dedicated service to our valuable clients, via our professional nationally spread staff.

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>>> CYBER THREATS! <<<

It’s Nasty and It’s Real. Find out more and how to be protected.>>> CYBER THREATS! <<<

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