Budget reaction: Chartered Insurance Institute bemoans lack of movement on Insurance Premium Tax

The Chartered Insurance Institute has expressed regret at Philip Hammond’s decision to not use the Budget as an opportunity to address what it calls “the unfair levels” of insurance premium tax (IPT).

Keith Richards, managing director of engagement at The Chartered Insurance Institute, said that around 17 organisations and charities, including many financial services bodies, had called for a climb down from last year’s Autumn Statement announcement to increase the IPT to 12% in light of stresses on consumers’ premiums.

“After effectively doubling IPT over the past two years, the Government has not tackled this pressing issue,” said Richards. “We are concerned the unintended consequences of artificially increasing the cost of insurance could dissuade people from insuring against the risks they face, potentially leaving thousands unprotected.

“At a time when the public needs more access to insurance and protection, dis-incentivising insurance cannot be worse timed,” he added.

The British Insurance Brokers’ Association (BIBA), meanwhile, said that it viewed the absence of an IPT rate hike as good progress. It said it would continue to campaign keep the tax at its current level, ideally without the planned increase in June.

It also called on the Government to push forward the legislation necessary to bring claims management companies under the auspices of the Financial Conduct Authority (FCA). It said that FCA regulation of CMCs would help reduce fraudulent whiplash claims, which in turn would help keep premium levels down.

On the same theme, Simon Trott, the managing director of National Accident Helpline, said that it was disappointing that the Chancellor had missed “yet another golden opportunity” to end the menace of nuisance calls in the PI sector.

“National Accident Helpline will continue to press for a blanket ban on all unsolicited marketing practices, along with more than 70 leading firms as part of the Ethical Marketing Charter. Only through doing so can we prevent rogue firms from targeting consumers and cut cold calls off at source,” he said.

Meanwhile, the Association of British Insurers (ABI), chose to use the Budget to once again attack the new Discount Rate.

“Today’s Budget confirms a massive £6 billion hit to the NHS caused by the Lord Chancellor’s decision to cut the personal injury Discount Rate to –0.75%,” said Huw Evans, director general of the ABI.

“This extraordinary bill for taxpayers ­– bigger than any other in this budget – shows how absurd this avoidable decision was. The OBR has also confirmed today that this will lead to higher inflation for years to come as the effects of such a massive increase in claims costs are felt by customers. This makes it even more urgent that the Government deliver a fair deal for consumers and claimants by bringing forward changes to the law this year.”