Internal Affairs Minister Tracey Martin says there are a number of flaws in the insurance-based funding of the levies, which were introduced in 2017.

These include the fact that property owners who do not insure are able to “freeride”; the levies increase insurance costs and may deter people from getting insurance; and administration is complex for insurers.

Martin says she has also heard concerns from large property owners who have faced substantial levy increases under the modernised levy regime.

“While the regime would improve equity across levy payers, it appears that it may unnecessarily impact on large property owners.”

The Government thinks there may be better ways to fund FENZ and there appears to be a trend away from insurancebased levies in other countries, Martin says.

The review will look at a wide range of funding options and will aim to achieve a model that is stable, universal, fair and flexible.

“No single option will fully satisfy all of these criteria, but I think we can do better than what we currently have.”

Insurance Council of NZ chief executive Tim Grafton, who has long been a critic of the levies, says the review should be welcome news for those who take out insurance to protect their properties.

“The current levies are a grossly unfair tax that lumps the insurance holders with the cost of running FENZ while also supporting access to emergency services for those who choose not to insure.

“The Government has made the right call to review how to fund FENZ in a way that is fair to everyone, simple, low cost to administer and lines up with what happens in most other countries.”

There will be no changes to the levies until the review has been completed.