Insurance-based levy to fund Fire and Emergency New Zealand

Implementing a new insurance levy to fund Fire and Emergency from 2026

A redesigned levy on insurance will fund Fire and Emergency from 1 July 2026. It will apply to insurance contracts covering loss or damage from fire, and to contracts of insurance covering motor vehicles (see Fire and Emergency NZ funding review for information about recent changes to the Fire and Emergency Act 2017).

Levy rates will determine the amount of fire levy payable on insured property. For motor vehicles, a flat levy amount will apply. For other insured property, the levy will be a defined proportion of the insured value. Levy rates and exemptions from paying the levy will need to be set in regulations for the new levy to operate.

Levy exemptions to apply from July 2026

The Government has decided the types of property to be exempt from paying the new levy. These decisions were informed by feedback from insurers and levy payers in 2022 and 2023. We intend to upload the submissions made on exemptions in 2022 and 2023 here shortly.

The following list of property will be exempt from 1 July 2026:

• New Zealand Defence Force property;
• mines and tunnelling operations;
• reservoirs, dams, drains or channels;
• offshore installations;
• cabling and pipelines on the sea floor, breakwaters, moles, and groynes;
• art and collections held by cultural heritage bodies;
• ships that are registered internationally;
• aircraft that regularly fly international routes;
• goods insured for import and export;

Three classes of insurance contract will also be exempt from the levy:

• insurance for war and terrorism risks, where the property is also insured under an all-risks policy;
• deductible buydown insurance;
• insurance covering existing property as part of contracts works policy.

Reasons for exemptions to the new levy

The reasons for exemptions are summarised below. These reasons align with the principles of the levy in section 80 of the Fire and Emergency New Zealand Act 2017. The Department’s Regulatory Impact Analysis that was an input into the Government’s decisions is available here: Regulatory Impact Statements and Assessments.

1. Insurance policyholders that cannot benefit from Fire and Emergency services should not pay levy 

Some policyholders receive little or no benefit from Fire and Emergency services. For example, Fire and Emergency can respond to most New Zealand incidents but is unable to respond to property located at sea. Some organisations also have separate emergency responses that limit their reliance on Fire and Emergency.

2. The levy should not be charged multiple times on the same property

The exempted classes of insurance contract include fire cover and are often purchased in addition to standard fire cover contracts. Exempting the three classes of insurance contract ensures the levy is not charged twice on the same property. 

3. How the levy applies to property travelling in and out of New Zealand must be clear

Exemption decisions clarify that international property that may be temporarily located within New Zealand’s borders (such as ships, aircraft or cargo) should not pay levy, even if its owners receive some benefit from Fire and Emergency while here.

The new levy will replace the current levy

The fire levy that applies from 1 July 2026 will replace the current levy. The current levy is a temporary funding solution for Fire and Emergency that is based on the funding system for the former urban fire service. Various property types, such as forestry, are exempt from paying the current levy. Fire and Emergency provides a broader range of services compared to the urban fire service, so it is appropriate to end the exemptions from that current levy scheme when the fire levy takes effect from 1 July 2026.

Fire and Emergency is seeking feedback on levy rates until 17 May 2024

Fire and Emergency is currently leading public consultation on the activities it intends to carry out, and the levy rates it proposes to meet its revenue needs for a three-year period from 1 July 2026. Public consultation on levy rates will run until 17 May 2024.

Levy payers are able to provide feedback on Fire and Emergency’s proposals here: https://fireandemergency.nz/about-us/public-consultation. Changes to levy exemptions are likely to impact policyholders who insure property that will no longer be exempt, and feedback on Fire and Emergency’s proposals from those policyholders will be important.

Following consultation, the Government expects to decide final levy rates later in 2024. Levy rates and exemptions will then be made into regulations by December 2024.

The Minister of Internal Affairs has asked for further evidence to support final levy rate decisions

The Minister of Internal Affairs has written to Fire and Emergency, outlining her expectations for further information before the Government makes final levy rate decisions.

The letter is available here: Letter to Fire and Emergency Chair from the Minister of Internal Affairs [PDF, 254KB]

Additional information is due from Fire and Emergency to the Minister by 10 May 2024 (not 10 May 2023, which is incorrectly noted in the letter).

The Fire and Emergency transitional levy will be adjusted in July 2024

Fire and Emergency has been primarily funded by a transitional levy since the organisation was established in 2017. The transitional levy is a levy on insurance contracts and will continue until the new levy replaces it in July 2026 (see Fire and Emergency NZ funding review for more information on the new levy).

The transitional levy rates are set to increase on 1 July 2024. This change will help meet the costs of the Collective Employment Agreement between Fire and Emergency and the New Zealand Professional Firefighters’ Union, signed in December 2022.

The transitional levy rates will increase by 12.8 per cent flat rate for all levy payers. This means that from July 2024:

• A household with coverage of their contents and one car will pay $4 more per year on their insurance premiums.
• A household with coverage of their home, contents and two cars will pay $18.50 more per year on their insurance premiums.

The regulations that outline these changes can be found here: Fire and Emergency New Zealand (Levy Rates and Information Requirements in Transitional Period) Amendment Regulations 2023 (Legislation website). Updated guidance for insurers and other levy payers can be found on the Fire and Emergency website at Fire and Emergency levy rate (Fire and Emergency New Zealand website).