As you know at High Gear we are always trying to get our customers the best rates for motor insurance, working within the confinements of insurance rules and regulations when doing so. For this reason surprise tax increases come as unwanted surprises, having a direct bearing on the premiums we can present to motorists. Just yesterday George Osborne, Chancellor of the Exchequer, announced a hike in Insurance Premium Tax (IPT) from 6% to 9.5% - just one of the unwelcomed announcements made in the official budget statement.
DriversWith insurance being an expensive service as it is industry officials are worried these soaring rates will just encourage illegal practice, with many driving opting out of cover due to financial restrictions. Imran Ahmed, High Gear Director said:
‘Our customers already require support to reach premium prices, with our monthly payment schemes often being a saviour to them. With increases in tax we are worried that further measures will have to be taken to lower the rates to meet budget, discouraging drivers as a result’.
BrokersNot only will the drivers be hit by price increases but insurers and brokers will also take a blow.
“We are extremely disappointed in this rise, as this will mean insurance for consumers will become more expensive,” said Steve White from the British Insurance Brokers’ Association. “Those hit by this stealth tax will include the 20.1million households with contents insurance, 19.6million with motor insurance, and 17million with buildings insurance.Another popular insurance provider issued an angry response to news of the insurance premium tax hike to 9.5 per cent, saying: 'The contention that falling premiums somehow justifies the tax increase is outrageous.' Managing director Janet Connor said: 'It means an additional £17.50 on top of the average quoted Shoparound premium, according to the AA’s benchmark British Insurance Premium Index, and it comes precisely at a time when premiums are beginning to rise once again.
'The average Shoparound premium at the end of the first quarter of 2015 was £530, having fallen from a peak of £742 at the end of 2011, following a significant increase in the number whiplash injury claims and ‘cash for crash’ fraud. They have not yet fallen back to the £493 which was a typical premium at the beginning of 2010.'