Association of British Insurers (ABI) response on the increase in Insurance Premium Tax and cuts to corporation tax
On the increase in Insurance Premium Tax, Huw Evans said:
“Insurance Premium Tax is a tax on people and businesses at the point at which they buy a general insurance product. So it’s very disappointing to see a more than 50% tax increase being imposed on consumers, especially when the insurance industry and Government has worked so hard in recent years to bring down the cost of essential insurance.”
The ABI calculates that the new rate of IPT will add £9.48 to the average annual household insurance policy (buildings and contents combined) and £12.25 to the average annual comprehensive motor policy.
On Corporation Tax, Huw Evans said:
“Further cuts to corporation tax are good news. They will continue to make the UK a highly competitive destination for insurers and savings providers and enhance London’s position as the insurance capital of the world.”
The increase in IPT has been roundly criticised by Business and the General public alike. Our initial thought was in a similar vein. However if the increase means that Insurance buyers review more closely their Insurance spend and work with a Professional Insurance Broker who will not only provide superior service but competitive pricing then all is not lost.
For instance at Sagar Insurances despite a huge increase in on line competition the retention rate for our Personal Lines team is constantly around the 95% mark. This would tend to support our view that for many consumers price is not the overall factor when looking at their Insurance renewal. Excellent service and advice, superior Claims Handling must also be a consideration.