Insurers in New Zealand have called upon the Government to replace the Fire and Emergency New Zealand (FENZ) levy on insurance policies, saying the current system is outdated, not fit-for-purpose, and unnecessarily adds to the cost of insurance for households and businesses.
According to a media release published on 16 September 2026 by the Insurance Council of New Zealand, the Council in a 13-page submission to the Government’s review of FENZ funding on 11 August 2026 said the emergency services should no longer be funded primarily through levies collected on insurance policies.
ICNZ Chief Executive Kris Faafoi said ICNZ strongly supports a well-funded FENZ and the work its people do every day but believes it is time to modernise how the service is funded.
“The current funding system reflects a time when fire services were closely linked to fire insurance, but that’s no longer the reality.
“FENZ today responds to a wide range of emergencies including vehicle accidents, medical events and civil defence emergencies. Everyone benefits from having a strong and effective emergency service.”
Mr Faafoi said, “The key issue is whether the current funding model remains the best way to ensure FENZ is sustainably and fairly funded. Insured households and businesses bear most of the cost through the levy, despite the benefits of FENZ being shared across the community. That is becoming increasingly difficult to justify.”
ICNZ submission also said the government taxes and levies account for around 40% of a typical home insurance premium, with the FENZ levy making up about 5%. Across all insurance products subject to the levy, it accounts for approximately 9% of premiums.
“The collection and administration of the levy imposes significant compliance costs on insurers, which are ultimately passed on to consumers,” said Mr Faafoi.
ICNZ has recommended FENZ be funded through a broader and more equitable approach, such as general taxation or property and vehicle-based levies, reflecting the public good nature of the services it provides.
“The current approach is inequitable because people with similar assets can pay very different levy amounts depending on the insurance cover they choose, while those who are uninsured contribute nothing towards funding the service.”
The submission notes most Australian states and many comparable overseas jurisdictions have moved away from insurance-based fire service levies, instead funding emergency services through general taxation, local government funding or property-based levies.