The specialist travel insurer is calling on the government to reduce the tax

Sick and elderly travellers are being hit with unfairly high insurance premiums because of a loophole in the tax system, specialist travel insurer AllClear has said.

And the company is calling on the government to rethink its position on insurance premium tax (IPT) and reduce the amount of tax charged to elderly and sick travellers.

Older travellers and those with pre-existing medical conditions typically pay a higher premium related to increased risk, but they are also paying a further 20% in IPT.

AllClear chairman Mike Rutherford said the tax was introduced to prevent a loophole “exploited” by travel agents who used commission payments to discount the overall cost of the holiday on which they were obliged to pay VAT.

But he added that with “radical” change to online in the way that customers book holidays, the 20% was no longer relevant.

The standard IPT rate on general insurance tax premiums is 6%.

“Travellers regularly tell us that the cost of insurance for travelling abroad is already high and that they are penalised simply because of their age or a medical condition,” Rutherford added.

“But whereas it is understandable that premiums are weighted according to risk, it is completely unfair that the elderly have to pay even more because of such a punitive and arbitrary tax.

“Retaining IPT on travel insurance at such a high level cannot be justified. It is simply unfair and it is about time the government – which says it is on the side of the elderly and hard-working families – did something about it.”