ESL collection

A key function of the Insurance Monitor is to ensure insurers do not collect more ESL from policyholders than they are required to pay to the NSW Government to fund the fire and emergency services.

The Monitor investigated and assessed individual insurance companies' ESL collections relative to their contribution requirement over a two year period (financial years 2015-16 and 2016-17 combined). Where insurers were found to have collected more ESL (over-collected) than they contributed to government they are required to repay this amount.

Guidelines were published by the Monitor and insurers made aware of the Monitor's approach to the investigation and resolution of over-collection of ESL amounts.

Insurers appear to have generally been mindful of their obligations under the Monitor's Guidelines, and as a whole collected approximately $60 million less ESL (under-collected) than they were required to contribute to the NSW Government.  

37 insurers out of a total 161 investigated were found to have over-collected ESL.  This has resulted in refunds of approximately $1.6 million being made.

Calculation of ESL relies on a number of inputs that must be estimated. Therefore, an over-collection of ESL may occur inadvertently, and is not necessarily regarded as price exploitation. However, the Monitor may take a different view if insurers are unwilling to repay over collected amounts.

More information

Research Note: ESL collections 2015/16 & 2016/17

Attached below is a research note providing a summary of the Monitors over-collection assessment process.

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ESL collection - Process details

The Insurance Monitor's ESL over-collection process was discussed in detail in the Monitor's June 2018 Quarterly report.  Please see section 4 in the attached report.

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