Over-collection assessment

The Emergency Services Levy Insurance Monitor has completed investigations of 161 accounts relating to companies registered  for ESL contribution purposes with the New South Wales Department of Justice (DoJ) for the 2015/16 and 2016/17 financial years.   

In accordance with the Guidelines on over-collection of ESL (December 2017), insurance companies who received a contribution assessment from the Department of Justice to make statutory contributions towards the funding of emergency services in NSW during all or part of the period from 1 July 2015 to 30 June 2017 were required to submit an ESL declaration, supported by an auditor / assurance opinion.

The Monitor found:

  • Collectively, insurers in NSW under-collected by $59.7 million over the 2015/16 and 2016/17 financial years.
  • Although the industry as a whole under-collected ESL, 37 individual insurers were found to have over-collected ESL during this period.  
  • As at 31 December 2018, over $1.6m of over-collected ESL has been returned by these insurance companies, as outlined in the table below, and a further five insurers have been referred by the Monitor to Revenue NSW for debt recovery of an amount equal to $29,468.
  • Data integrity issues were identified at four insurers, which the Monitor is continuing to investigate further.
Refund/Payment recipient Total amount of refund/payment
Policyholders   $527,600
Revenue NSW $1,115,588
Total $1,643,188

As over-collection of ESL may occur inadvertently, the Monitor has previously stated that over-collection, in and of itself, may not be regarded as price exploitation, however, the Monitor may take a different view if the relevant insurer refuses to refund the over-collection amounts.

ESL assessment process

Insurers meeting the criteria for assessment were required to submit an ESL declaration, supported by an assurance certification by a qualified auditor, to the Monitor by 1 February 2018.  

The form of the ESL declaration and assurance certification required by the Monitor was set out at Appendix B of the Guidelines (and attached below).  

  • Alterations or modifications to the wording, structure or layout of the Monitor’s template were not accepted.
  • Documents assessed as non-compliant required re-submitting.

In total 161 accounts relating to companies who were registered for ESL contribution purposes were identified by the NSW Department of Justice for the 2015/16 and 2016/17 financial years.  A number of accounts were removed during the process as they related to companies that had no ESL liability, had merged with other companies who provided ESL declarations, had submitted an 'Owners of Property' form during the relevant two year period, or were otherwise deemed inactive.  

Refund undertakings

A refund undertaking sets out the terms and conditions agreed with the Insurance Monitor, under which an insurance company determined by the Monitor to have over-collected ESL will refund that amount to policyholders, or pay it to Revenue NSW for payment into the Consolidated Fund.  
Where an insurance company conceded the existence of an over-collection amount, accepted liability for that amount and provided an appropriate refund proposal, the refund proposal formed the basis of a refund undertaking accepted by the Monitor under section 31H of the Act.  If breached, refund undertakings are enforceable by the Monitor in the New South Wales Supreme Court.  

A refund undertaking register is available on this website.
 

Appendix B

Appendix B of the Over-collection Guidelines.  

Please note:  alterations or modifications to the wording, structure or layout of the Monitor’s template will not be accepted.

word link to Appendix B