Insurance brokers welcome FENZ levy rethink

 The Insurance Brokers Association of New Zealand (IBANZ) is welcoming news that Hon. Brooke van Velden, Minister of Internal Affairs, is exploring better ways to fund Fire and Emergency New Zealand (FENZ).

95% of FENZ income is currently collected from levies on property insurance yet FENZ performs a range of non-fire related functions such as responding to medical emergencies, maritime incidents and severe weather events and disasters. In the nine months to March 2026 only 59% of incidents FENZ responded to were fire related, including attending false alarms.

IBANZ Chief Executive Katherine Wilson says the challenge is that insurance policy holders end up paying for services that all members of the public receive, regardless of whether they are insured.

IBANZ’s position is that the FENZ Levy should be removed from the insurance sector and instead be collected via either central government taxation or council rates.

'A national or regional collection would be more equitable and consistent, and see all New Zealanders contribute towards the important services FENZ provides.'

Wilson says insurance brokers have long been concerned about fairness and equity issues with the levy. “Access to FENZ services is quite rightly available to all New Zealanders, but those who pay insurance premiums are unfairly burdened with funding them.

The sums involved are significant. FENZ levy payments amounted to nearly $800 million in 2024/25 and given insurance brokers place around half of all insurance in New Zealand they are the unpaid administrators of the levy - calculating, collecting and handing over large sums of money to FENZ on behalf of the government.

“The system is complex for brokers and consumers alike. Brokers have to interpret complex rules to calculate the proportion of levy payable leading to administrative load, potential misinterpretation, inconsistency and friction for both brokers and clients.

Wilson warns that increasing challenges around insurance affordability mean we could see a shrinking pool of FENZ levy payers if the current levy mechanism is maintained.

IBANZ has long called for a review of the FENZ levy and looks forward to working with the Department of Internal Affairs on alternatives.