First it was the Ogden rate, now it’s the Insurance Premium Tax (IPT) that’s causing a ruckus. And with the Budget coming up, it’s hard to keep calm.
Worrying figures from a survey by the largest public sector insurer in the UK have been released, and no amount of sugar-coating can paint a rosy picture from the findings. Here are the numbers from
Zurich Municipal:
- 47% of public sector and voluntary bodies would be unable to “adequately insure” all their risks if a further increase in IPT is announced.
- 32% have increased their excesses or the amount they pay towards claims costs, amid IPT hikes.
- 18% have reduced their insurance cover; 13% have stopped insuring some risks altogether; 43% said their level of cover is under review.
- 47% would be forced to reduce frontline services if IPT reached 20% (same as value-added tax).
- 28% have already reduced services due to IPT rises; 11% cited service closures; 14% reported job losses.
“Public and voluntary sector bodies are doing their best to maintain their cover despite repeated rises in IPT,” said Zurich Municipal managing director Andrew Jepp. “But many are now facing tough decisions over the risks they protect themselves from.”
Jepp continued: “The growing cost of IPT is leaving some organisations with little choice but to reduce their insurance cover. This means they are being forced to take on more risk, leaving them vulnerable to financial losses when things go wrong.”
The insurance executive said budget pressures on the public and voluntary sector could result in funds being diverted away from vital frontline services.
“UK insurance is already highly competitive and operates on tight margins, meaning there is very little in providers’ control to balance the impact of successive IPT increases,” explained Jepp. “What is needed is a consistent approach which avoids arbitrary increases. The Government should commit to no further increases in this Parliament and carry out a full-scale review of its approach to IPT.”
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