Life plans escape IPT as PMI is hit
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Insurers expressed relief that the Chancellor did not decide to apply insurance premium tax to life insurance products but concerns remain as the tax rate increases will affect private medical insurance.
In line with the main rate of VAT rising from 17.5 per cent to 20 per cent next year, the higher rate of insurance prem-ium tax will also rise from 17.5 per cent to 20 per cent. The standard rate will increase from 5 per cent to 6 per cent.
IPT applies to products such as motor insurance, travel insurance and buildings and contents insurance. It also applies to private medical insurance.
Munich Re head of marketing Andy Milburn says: “Our position as a group is that we really do not like the insurance premium tax because we think it stops people buying insurance. We do not like the tax in total-ity but we are glad that it has not been extended to life insurance.”
But British Insurance Brokers’ Association chief executive Eric Galbraith says: “We are concer-ned that increases to insurance premiums as a result of IPT could lead to even further underinsurance or even a lack of insurance protection.”
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Readers' comments (1)
Norm d'Plume | 25 Jun 2010 5:05 pm
IPT does not stop people buying insurance!
Whilst insurers scrabble for market share, premiums for nearly all classes of business keep going down. Increasing IPT means that they don't go down so much.
Insurers don't seem to realise that everyone going for market share means no-one gets it. Anyway, isn't insurance a business, supposed to make PROFITS?
The Government could have increased IPT to 10% and probably got away with it!
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