A tax cut would boost insurance uptake and improve road safety, industry says
The CII has asked new Chancellor Rishi Sunak to reform insurance premium tax (IPT) in his first Budget to help make insurance more affordable.
The institute said that IPT has unreasonably risen over time from 2.5% to 12% since it was introduced in 2015, increasing the true cost of insurance and hitting hard working people the hardest.
And Keith Richards, managing director of engagement for the CII, urged the government to cut the tax to help cut costs and make insurance more affordable.
“This stealth tax on responsible and vulnerable customers should be cut,” he said.
“We are asking the government to consider the benefits for consumers of reducing the cost of premiums by cutting this tax, and the knock-on positive effect this will have across the country in making insurance more affordable for people to protect against the risks in life which may otherwise be catastrophic.”
And BIBA has highlighted four areas that it believes the government should consider when looking at the future of IPT.
The association said that IPT provides government with additional revenues from hard-pressed consumers and businesses to the tune of £6.2bn, leading to a lack of uptake of insurance and individuals and businesses losing out on resilience.
And Zurich UK chief executive Tulsi Naidu said it is often the most vulnerable that are the worst hit by any increase in IPT.
“There is a string of unintended consequences when there is an increase in IPT: it affects charities, public authorities, businesses and individuals, disproportionately affecting those with higher insurance risks,” she said.
”Our research into the public and voluntary sectors, showed that nine out of 10 respondents felt that any increase would negatively impact them financially, forcing them to make job cuts or cut budgets elsewhere, while nearly half said it would affect their organisation’s ability to adequately insure itself against the risks they face.”
In light of Zurich’s research, BIBA is demanding that the rate of IPT remains frozen for the duration of this Parliament.
BIBA has also identified the young driver and cyber markets as two specific areas that are disproportionately affected by rises in IPT, and is calling on the Chancellor to grant relief on IPT for both telematics-based policies and cyber insurance, saying that the resultant uptake in insurance would improve road safety and build business resilience, reducing the burden on the state.
Subscribers read more