Calls for chancellor to relent on Insurance Premium Tax rises
02 November 2016
Author: Tom Webster
Insurance premiums have risen by an average of £82, or 16.3%, compared with last year, according to the AA.
The average comprehensive policy costs £585.84 according to the AA's British Insurance Premium Index at the end of September 2016, a rise of £20 over the previous three months alone.
This is down in part to recent increases in Insurance Premium
Tax (IPT), which rose to 10% on
1 October, and could yet go higher in the forthcoming Autumn Statement on 23 November.
The AA and the Association of British Insurers (ABI) have both called on chancellor Phillip Hammond not to increase IPT in the mini Budget and spare motorists the financial penalty that such a move would bring.
"Successive rises have seen Insurance Premium Tax jump by two-thirds in just under a year to 10%," said a spokesperson for the ABI. "These recent rises alone are likely to add an extra £16 a year to the cost of the average comprehensive motor policy. The Government must not increase this raid on the responsible, which hits people who have done the right thing in taking out insurance."
Michael Lloyd, the AA's director of insurance, said he couldn't see an end to the current rise in insurance premiums, adding: "Coupled with predicted price increases, any additional tax burden would simply add to the growing number of uninsured drivers."
As well as the IPT, Lloyd puts the rise down to the ongoing high level of claims for whiplash. "Drivers are still being pressured into making claims for often minor collisions they might have forgotten about," he said. "This is pushing up claims costs because insurers can't prove that an injury wasn't suffered."
The AA has said that fleets that adopt new technology will be well prepared to deal with rising premiums, with a spokesman saying: "Fleets are more likely to use technology to track where drivers are and their behaviour, and that tends to produce a better experience. Fleets that are using such technology are certain to have better premiums than those that don't."
The AA has also raised concerns that fuel duty might be subject to a rise in the forthcoming Autumn Statement, although it stopped short of predicting an increase.
"We are also calling for fuel duty to be left alone, said a spokesperson for the AA. "Fuel duty has been frozen since 2011 so we are concerned that [the chancellor] might tinker with it."
Petrol and diesel prices have both risen by around 6p a litre in the past two months, with the falling value of the pound versus the dollar blamed in part for the increase.