Emergency Services Levy Reform Puts Office Cover Back in Focus

The Emergency Services Levy has been criticised for placing a heavier burden on those who insure responsibly, while businesses that remain uninsured or underinsured contribute less to the cost of emergency response. For many office tenants and owners, the levy has been one of several factors adding pressure to commercial property insurance costs, alongside rebuilding inflation, claims costs, weather exposure and insurer appetite.

If reform reduces the tax component built into relevant premiums, it may create some breathing room for NSW businesses. However, a lower premium should not automatically be treated as a reason to cut cover. The more useful response is to review whether current limits still reflect the real cost of replacing office fit-out, furniture, technology, stock, records and specialised equipment.

This is particularly important for businesses that have grown quickly, changed premises, adopted more cloud-based systems, added staff, or taken on larger client contracts. A policy arranged several years ago may no longer match the way the business operates. Underinsurance can become visible only when a claim is made, and by then the financial gap can be difficult to absorb.

Office-based SMEs should also remember that levy reform will not affect every risk in the same way. Professional indemnity, cyber liability, management liability and public liability exposures are driven by different underwriting factors. A cheaper property-related component does not remove the need to assess advice risk, visitor risk, data exposure or contractual insurance requirements.

A timely renewal review should include a few practical steps:

• check whether sums insured reflect current replacement and reinstatement costs;
• review business interruption periods against realistic recovery timelines;
• confirm whether lease obligations require specific property or liability limits;
• compare excesses, exclusions and sub-limits rather than focusing only on headline premium;
• ask whether risk controls, alarms, backups and maintenance records are being recognised by insurers.

For businesses unsure where to start, it can help to estimate replacement values before renewal discussions and then test those assumptions against policy wording. Where cover is complex, an insurance broker or adviser can help identify whether savings from levy reform are best retained as cash flow relief, reinvested into stronger limits, or used to address gaps in the broader insurance programme.

The key message for office-based businesses is simple: affordability reform is welcome, but it should support better protection decisions rather than encourage a race to the cheapest possible policy.