Recent rises could be adding over £100 a year to household bills.
Since November 2015, the Government has increased IPT by two-thirds from 6% to 10%. IPT affects car, home, pet, private medical insurance and cash plans, as well as most commercial insurances.
The ABI calculates that the combined impact of the rises in IPT from 6% to 9.5% in November 2015, and then by a further 0.5% to 10% in October this year could have added an extra £109 to the annual insurance bill of a typical household, on the basis of:
-More than £32 to the average comprehensive motor policy, assuming two cars.
-Over £12.50 to the price of the average combined buildings and contents policy.
-More than £12 to the cost of the average pet insurance policy.
-A further £52.50 to the cost of the average private medical insurance policy.
James Dalton, ABI’s Director of General Insurance Policy, said: “It is time to stop this raid on the responsible. IPT is penalising millions of households and businesses throughout the UK who are doing the right thing by taking out insurance to protect themselves against many of life’s expensive uncertainties. The Prime Minister has said she wants to help those who are just managing. This tax impacts hardest on those least able to afford it, and often in greatest need of the protection that insurance provides. Any further hike in IPT could not only affect millions of people directly in their pocket, but result in some people reducing or dropping their insurance cover completely.”
Any further rise in IPT could put a further strain on many household budgets. For example:
-Motor insurance. The price paid for the average comprehensive motor policy is £440 a year. This has risen 9% over the last year, as a result of rises in IPT, the cost of settling the average personal injury claim, and higher average vehicle repair bills.
-Pet insurance. Many pet owners do not have pet insurance, and any rise in the cost of cover could discourage more owners from taking out cover. Only one in four dog owners and one in seven cat owners are thought to have pet insurance, despite the average insurance claim being around £720.
-Health insurance. Any Government action that could increase the cost of private health insurance runs contrary to the desireto help relieve pressure on the NHS.
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