The industry’s call to freeze the insurance premium tax (IPT) has reached parliament as the British Insurance Brokers’ Association (BIBA) and other groups warned the government on the impact of another rate hike.
Graeme Trudgill, BIBA executive director, faced a legislative committee on Tuesday to present evidence on the cost of car insurance, particularly for young people. He told lawmakers that potential increases to IPT could further raise premiums.
According to a survey conducted by BIBA, 90% of brokers fear that a further rise in IPT will prompt clients to reduce their insurance protection or buy no cover at all.
Brokers are also concerned that clients do not understand the full extent of IPT on every policy and that they are unhappy with how expensive and complicated insurance has become.
“Any further increases are likely to have an impact on the number of uninsured drivers on the UK’s roads… It is our members’ view that current policy on Insurance Premium Tax is detrimental to the take up of insurance,” said BIBA chief executive Steve White.
Other industry groups have echoed BIBA’s call to freeze IPT hikes including the Federation of Small Businesses, with its national chairman Mike Cherry calling the tax a “significant cash cow for the Treasury.”
“We are concerned that the steep rise in IPT announced at the end of last year will affect those small businesses who already struggle to find affordable car, premises, liability and flood insurance,” Cherry said.
Federation of Master Builders chief executive Brian Berry also chimed in, saying that the recent IPT hike has “troubling implications for construction SMEs and homeowners.”
“By driving up the costs of insurance it punishes those businesses that play by the rules and make sure that they are always covered,” Berry said. “This is increasing the danger that homeowners could be tempted to opt for uninsured builders who are able to offer a more competitive quote.”
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