Recent state budget announcements in New South Wales and Queensland have prompted renewed commentary from the Insurance Council of Australia (ICA), which continues to press for tax reform and greater investment in natural disaster preparedness.
NSW remains the only mainland jurisdiction to apply the Emergency Services Levy (ESL) directly to insurance premiums.
While the state has previously committed to phasing out this model, the 2025–26 Budget reaffirmed the government’s intent to progress toward a new funding mechanism for emergency services, one that does not rely on policyholders alone.
Data from the budget papers revealed that the average ESL added to a home insurance policy last year was $285, with significant variation based on a range of factors including property location and exposure to severe weather. For median-valued properties, the ESL ranged from $107 to $461 annually.
The NSW government indicated that a transition plan is in development, supported by tax analysis and stakeholder engagement. A consultation process is underway, led by a reference group chaired by the Treasurer and comprising industry and community representatives.
Kylie Macfarlane, ICA deputy CEO, said the sector supports the state’s intent to modernise the funding approach.
“The ICA congratulates the New South Wales government on its ongoing commitment to reform the ESL and will continue to work with the government on this important work,” she said.
Across both NSW and Queensland, insurance-related taxes – including ESL and stamp duties – are projected to generate more than $21 billion over the budget period. Each state anticipates collecting close to $8 billion in insurance duty revenue.
The ICA has reiterated its long-standing view that these taxes discourage adequate insurance coverage.
“The removal of these taxes on household and business insurance is the most immediate way to reduce insurance premiums,” Macfarlane said.
Alongside tax reform, budget allocations in both states include funding for climate resilience initiatives.
NSW committed $4.2 billion, with federal support, to assist post-disaster recovery and invest in mitigation measures, including $63 million for relocation support in flood-prone areas such as the Northern Rivers.
Queensland, facing similar weather-related risks, allocated an additional $280 million to enhance infrastructure resilience.
Both states are home to the bulk of Australia’s high-risk flood zones, comprising over 260,000 vulnerable properties.
“With insured losses already exceeding $1.5 billion this year and four major flood events across both states so far, every dollar toward risk reduction will help to reduce losses and deliver better resilience,” Macfarlane said.
The federal government’s 2025–26 Budget also included initiatives with implications for insurers and emergency planners. Key measures include $1.2 billion in disaster support payments and $28.8 million over two years to strengthen national hazard response systems.
This includes $17.7 million for bushfire resilience programs and $5.4 million to expand emergency broadband services in partnership with the states and territories.
Despite these allocations, the ICA continues to advocate for a more comprehensive approach. It has proposed a $30.15 billion Flood Defence Fund to be co-funded by state and federal governments over 10 years. The fund would cover flood mitigation infrastructure, home retrofitting, property buybacks, and maintenance of existing defences.
Separately, the ICA acknowledged Queensland’s ongoing review of its Compulsory Third Party (CTP) insurance scheme.
The review, initiated in 2023, aims to safeguard the scheme’s long-term viability while maintaining existing compensation and pricing arrangements.
A discussion paper has been circulated, with industry submissions now under consideration.
The ICA has said it will continue collaborating with governments at all levels to improve insurance affordability and bolster community resilience to natural hazards.
