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WPA offers high-excess corporate policy to cut IPT

Private medical insurer WPA has devised a high-excess PMI policy for companies that reduces the cost of insurance premium tax.

Insurers base their pricing for PMI corporate policies on a company’s previous claim experience, creating a claim fund.

As the premium is based on claims experience, much of the claim fund is risk-free, as it is likely the company will claim up to a certain amount.

But IPT, which is set to rise from 5-6 per cent in January, applies to the whole premium, including the risk-free element.

WPA has developed a corporate deductible scheme that insures the actual risk for companies with between 200 and 500 employees.

The insurer has sought advice from HM Revenue & Customs, which has confirmed that the scheme is valid.

WPA says some companies that have moved to the corporate deductible scheme have made annual savings of between £25,000 and £150,000.

A WPA spokesman says: “Corporate deductible is essentially a high-excess policy for companies and is an effective way of reducing IPT costs.

“Large corporate insured schemes should consider making the switch to a corporate deductible scheme to achieve significant cost savings with no impact on benefit provision.”

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