Businesses look likely to be the big winners under a new emergency services tax which will affect millions of NSW property owners.
The new tax, designed to replace the emergency services levy on household insurance policies, will cost about $160 on average a year.
The NSW government estimates insurance premiums will fall by about $200 a year because of the change, giving the average property owner a saving of $40.
"It's based on modelling which treasury has done," Treasurer Gladys Berejiklian said.
"All modelling is based on assumptions but we know that on average the vast majority who pay insurance will be better off."
Ms Berejiklian said the new way of paying the emergency services levy is a much fairer system because it means those who insure their properties will no longer be subsidising those who did not.
Consumer watchdog boss Allan Fels has been appointed to monitor the policy change and ensure insurers pass on the cost savings to consumers.
Insurers are committed to passing on the savings to their customers, Insurance Council of Australia CEO Rob Whelan said.
"ICA figures show removing the ESL will save the average policyholder more than $250 a year on the cost of their household insurance", he said.
But the government has been criticised for introducing a system which looks likely to benefit businesses over homeowners.
"The government's own 2012 discussion paper made it clear that these changes will cost homeowners an extra $200 million a year while delivering businesses over $250 million in tax cuts," Greens emergency services spokesperson David Shoebridge said.
The change will result in residential property owners paying 75 per cent of the new tax while businesses and rural landowners pay less than 15 per cent each, he said.
"This is despite the fact that businesses make up 55 per cent of all emergency services call outs," he said.
The Fire Brigade Employees' Union said it's concerned the plan will leave the most vulnerable members of the community worse off.
"The Baird government is acting like a reverse Robin Hood, robbing from the poor and giving to the rich," FBEU secretary Jim Casey said.
If the new system is efficient, exemptions shouldn't be made for motor vehicle owners, NSW executive director of the Property Council of Australia, Glen Byres said.
"If you exclude them out of the new system, that's going to be pushed onto property owners," Mr Byres said.
The levy will bring NSW in line with other mainland Australian states and take effect from July 1 2017.
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