A tax is usually including practically £100 to the annual cost paid by customers for motor and mixed buildings and contents home insurance coverage insurance policies, in accordance with an trade physique.
The Association of British Insurers (ABI) launched the figures because it urged Chancellor Jeremy Hunt to cut back the speed of insurance coverage premium tax (IPT) in subsequent week’s autumn assertion.
It argued that doing this could assist hundreds of thousands of households and businesses handle their rising insurance coverage prices.
IPT is a tax levied on insurers, however in observe it’s handed on to clients because it feeds into the quantities charged for insurance policies.
For motor and home insurance coverage alone, IPT sometimes equates to an added cost approaching £98 per yr, the ABI stated, made up of £60 for motor insurance coverage and simply over £37 for a mixed home buildings and contents coverage.
It added that IPT equates to round £46.50 being added to a pet insurance coverage coverage and £13.50 to an annual journey insurance coverage coverage, sometimes.
IPT applies to most normal insurance coverage insurance policies together with motor, home, pet, and personal medical insurance coverage. The commonplace price has doubled to 12% since October 2015.
The ABI stated it’s prone to hit the poorest the toughest who spend proportionately extra on insurance coverage, similar to home and motor cowl.
The prices of some insurance coverage insurance policies have been surging amid jumps in prices for uncooked supplies, labour and vitality. Rising second-hand automotive costs and the growing sophistication of vehicles have additionally been elements pushing up insurance coverage costs.
The ABI calculated {that a} single person with a automotive (paying motor insurance coverage) who’s renting a flat (paying contents cowl) and paying journey insurance coverage could possibly be paying round £87 in IPT.
For a pair with two vehicles (paying two motor insurance coverage insurance policies), their very own home (paying mixed building and contents cowl), a pet (paying pet insurance coverage) and each with journey cowl (two journey insurance policies) could possibly be paying round £231 yearly in IPT.
If one person within the couple additionally has personal medical cowl, not equipped by work, they could possibly be paying round £500 yearly in IPT, the ABI stated.
Last yr, the tax made £7.45 billion for the Government, the affiliation added.
Mervyn Skeet, the ABI’s director of normal insurance coverage coverage, stated: “Insurers are doing all they can to offer competitively priced insurance, despite facing some substantial increases in costs outside of their control.
“Now has never been a better time for the Government to show its support to the millions of homeowners and businesses who do the right thing by protecting their families and livelihoods against sudden financial shocks, than to reduce insurance premium tax.”
A Treasury spokesperson stated: “Insurance premium tax, which contributes over £7 billion towards vital public services, forms just one part of the overall cost of insurance and the extent to which it is passed on to customers is a decision for insurers.
“Other factors affecting the price of insurance include the level of competition in the market.”
