Edmund King OBE, AA president, said: “ The Chancellor has listened to our campaign against a 3% hike in Insurance Premium Tax and 0.5% increase is better than expected. Using it for flood defences is helpful but it simply replaces past spending cuts and in effect targeting motorists to pay for flood alleviation is robbing Peter to pay Paul.
It is still the youngest drivers who are hit hardest – they will have seen almost £50 on average, added to their premium in just six months.
Mr King added: “We would have liked the Chancellor to recognise the difficulty and cost faced by young drivers buying cover for their cars by abolishing IPT for them, for at least the first year of insuring their first car. That would have been a significant help – it would typically have knocked £124 off their first car insurance premium.”
Paul Geddes, CEO, Direct Line Group said:
"While a further increase in insurance premium tax (IPT) could be an additional increase to household finances, we are pleased that the Government has committed to use the spend on flood defences, as the storms at the end of 2015 were another reminder that more needs to be done in this area to protect the homes that are at a high risk of flooding."
Adrian Smith, Global Head of IPT, KPMG said:
“With the recent floods fresh in the mind, there is an obvious political rationale for the Chancellor ring fencing the money raised by increasing IPT. The rise by 0.5% to 10% appears small, but the rate of IPT has risen 66% since last summer. This will be worrying for insurers but could also mean individuals and businesses may fail to take out or renew essential, and often, compulsory insurances.”
Harris Balcombe - Why £700m investment in flood defences is the tip of the iceberg
Alex Balcombe, Director, Harris Balcombe, said: “The Chancellor today announced a 0.5 per cent rise in the Insurance Premium Tax that will raise £700m to boost spending on building and maintaining flood defences.
Flooding has brought misery and financial loss to thousands of businesses and families in Britain this year. We welcome the additional and much needed investment in flood defences, but we also question if it is too little and too late?
KPMG suggests that the economic impact of the flooding this year will reach £5.8 billion – figures that tell us that greater investment in flood defences is needed and an entirely new approach to flood mitigation. Current levels of investment in flood defences aren’t enough and the system simply isn’t working
We believe that Britain needs to mirror the USA where there is a centralised system to manage flood mitigation. The Federal Emergency Management Agency (FEMA) brings together US government agencies, planners and the insurance industry to co-ordinate flood mitigation, emergency disaster response, and it funds rebuilding efforts and relief funds for infrastructure.
FEMA ensures better housing planning and reduced risk for homeowners and businesses through flood plain mapping and analysis with is reviewed by planners, developers and estate agents to limit building and also banks to inform their mortgage decisions.
It helps businesses and homeowners mitigate against disaster through pre-disaster mitigation grants which are available to acquire property for conversion to open space, retrofit existing buildings, construct tornado and storm shelters, manage vegetation for erosion and fire control, and small flood control projects.
With the flooding in Britain becoming more intense each year, greater sustainable investment is needed to mitigate flood risks. A more robust infrastructure is needed and we hope government takes note and reconsiders the whole approach to flood mitigation. It is an issue that isn’t going away.
Bennett Christmas Insurance Brokers
Stealth tax should prompt rethink on business insurance
Businesses should examine their insurance policies carefully in the light of higher Insurance Premium Tax (IPT) announced in the Budget, Burgess Hill brokers Bennett Christmas said today.
On Wednesday, the Chancellor said the levy charged on most commercial and household policies would go up by 0.5% to 10%.
The tax hike follows a 3.5 percentage point rise in the IPT last year.
“But that’s unlikely to be the end of it,” said Mark Bennett, CEO of Bennett Christmas Insurance Brokers. “The IPT has already gone up once in the past six months and while this increase is less than was widely anticipated, the direction of travel is clear.
“Our concern is that small businesses will look to cut costs by reducing their cover and increasing their exposure when what they should be doing is looking at where the biggest risks are in the business and prioritising what they need.
“Most packaged insurance policies include the ‘must-haves’ but they also lump in some of the ‘can-do-withouts’. By looking carefully at the business, a good broker can build a bespoke policy that’s often better than what you had and costs you less.
“For example, many policies include cover for goods in transit but they don’t include cyber insurance. You may only carry a couple of thousand pounds worth of goods in a van, but your company’s cyber exposure could stop your business altogether if your computer network is infected and this is likely to cost a lot more; I think I know which I would choose to include in my policy.”