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Summer Budget: Insurance premium tax rise leaves premium impact uncertain
Date: 08 July 2015 | Author:
Insurance premium tax, paid on general insurance policies including car insurance, is to rise from its current 6% to 9.5%, the chancellor announced in his summer Budget speech.
Effective from this November, the chancellor cites the fact that the UK's rate is lower than other EU member states, comparing it with Germany's 19%.
But the AA reacted angrily, describing it as an "outrageous hike which could well backfire by leading to an increase in uninsured drivers," according to AA president Edmund King. The organization claimed that IPT increase will mean an extra £17.50 on a £530 average premium, and that it will also apply to breakdown cover.
The move was one of a number affecting the insurance market, with the Government also looking into claims management companies via a "fundamental review of the regulation of claims management companies, which will report to HM Treasury and the Ministry of Justice in early 2016". It will also bring forward proposals for the introduction of a cap on the charges CMCs can apply to their customers, consulting on how these would work in practice."
Also mentioned in the Budget statement was that the Insurance Fraud Taskforce will report by the end of this year on what can be done to reduce the impact of fraud on insurance premiums.
