The professional body also seeks insurance premium tax relief on cyber insurance policies for small businesses
Biba, the membership organisation for brokers, has called upon the government to freeze the insurance premium tax (IPT) rate at 12% for the duration of the Parliamentary term, labelling the tax as an “unfair burden” on both businesses and consumers.
In its 2020 manifesto, launched yesterday as the House of Commons, Biba further pressed government to consider targeted IPT relief to encourage responsible behaviour – currently, Biba believes IPT “acts as a huge disincentive to the purchase of adequate insurance protection”.
With IPT revenues reportedly hitting £6.2bn a year, this is the first time that Biba has referenced IPT in its annual manifesto. The organisation quoted Zurich Insurance research, which identified a correlation between steady increases in IPT and a decline in the uptake of insurance.
Tulsi Naidu, chief executive at Zurich UK, explained: “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.
“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 organisations’ ability to adequately insure itself against the risks they face.
“The current inequitable rules on IPT – where insurance policies are subject to IPT, but alternative models of risk transfer are exempt – also means that any increase distorts competition and choice for customers.
“It is not right that price, rather than quality of service and cover, should drive competition.”
Biba’s manifesto additionally asks HM Treasury to offer IPT relief on cyber insurance policies for small businesses, to help encourage greater uptake of this product in order to combat emerging risks such as cyber-attacks, regulatory shut-downs, political risks, strikes or blockades and non-damage denial of access. These types of issues could be included within a non-damage business interruption policy, for example.
Steering premium prices
Biba is further campaigning for the government to provide IPT relief for young drivers who use telematics-based car insurance policies, or who undertake comprehensive post-test driver training, in line with learnings from Speed Awareness Courses.
The thinking behind this is that IPT relief would act as an incentive for more drivers to use telematic policies for their car insurance – these have been proven to help moderate driving behaviour by reducing speeding by 25% and increasing road safety through the provision of premium savings.
Steve Kerrigan, senior vertical market manager, telematics and connected car at LexisNexis Risk Solutions, added: “We believe that telematics insurance has done more to cut accident risk than other road safety initiatives targeting the young driver market.
“We support Biba’s call; the use of the technology should be encouraged for all new and young drivers to give them the safest start on the roads, and to protect other road users.”
Subscribers read more