UPDATE: INSURERS are being warned they face fines of up to $10 million if they fail to remove the Victorian fire services levy from premiums.Professor Allan Fels, who has been appointed to monitor the levy, said he will closely watch insurers to ensure the levy is removed or risk hefty penalties.
At the moment, insurers contribute to the cost of operating Victoria's fire services and pass on this cost to policy holders through a fire services levy.
But from July 1, a new fire services levy will be collected by local councils, replacing current arrangements.
The Victorian Government has dubbed the new property-based tax the most important reform of state taxes in decades, adding it ensures that those property owners who don't have home insurance will soon have to pay their fair share for the state's fire fighting services.
Prof Fels will meet with insurers on Wednesday to discuss the removal of the levy.
"They must remove that element from their premiums from July 1," he told reporters in Melbourne.
"There are very big fines, $10 million for price exploitation and also $10 million for any misleading or deceptive conduct.
"We'll be keeping really close scrutiny of the insurers to make sure they do the right thing."
The state government has allocated $53 million to help support local councils to implement, administer and collect the levy.
Treasurer Kim Wells said the government had abolished GST and stamp duty costs through the new levy arrangements, which would provide a saving of more than $100 million a year to households and businesses.
Residential home owners will pay a fixed $100 fee, while the fee is $200 for commercial, industrial, farming and vacant properties.
On top of the fixed charge, a variable component will be levied as a percentage of the capital-improved value of a property.