As the Chancellor announced his budget this week, the insurance industry was hit with the news that insurance premium tax (IPT) would be increased by over 50% from 6% to 9.5%!
Eleanor Moore, Personal Lines Manager at C&C Insurance Brokers commented,
“This increase will affect our clients dramatically. For example, as a result of this increase, a £400.00 premium will see the IPT increase by £14.00, a £2,000 premium will see an increase of £70.00 and a £10,000 premium will increase by £350!
“In an industry where value for money is key, it can be seen that it is the insurers who are increasing their premiums unnecessarily. Customers can fail to realise that IPT is beyond the control of insurers and brokers and we are just expected to apply these increases without dispute.”
The CEO of the British Insurance Brokers Association, Steve White, said,
“We are extremely disappointed in this rise in Insurance Premium Tax and will mean insurance will become more expensive for the public as a result. Those hit by this stealth tax will include the 20.1 million households with contents insurance; 19.6 million with motor insurance and 17 million with buildings insurance.
“The Government has been working with the industry to reduce the cost of insurance for consumers – including a summit chaired by the Prime Minister. It therefore seems counterintuitive to be taking measures which will add to the cost – effectively taxing protection.
“We hope the Government will review this rise and correct it in further budgets.”
The change comes into effect in November 2015.
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