Association says the cumulative impact of the discount rate cut and the IPT rise will lead to price rises for policyholders
Airmic is concerned about the impact of the discount rate cut on commercial policyholders and called on policymakers to avoid further damaging the industry through additional tax rises this year.
The UK risk management association said it is deeply concerned about the timing and scale of the change and the impact on businesses. “Not only has the industry not been appropriately consulted, the decision is based on a formula in desperate need of reform,” deputy chief executive Julia Graham said.
Monday’s announcement came just four months before a significant rise in insurance premium tax (IPT) comes into force and Airmic believes the cumulative effect of these changes will inevitably feed through into price rises for policyholders. “The impact won’t be felt overnight but slow-burn issues can be more damaging in the long run as they are less visible,” Graham noted.
She called on policymakers to consult more widely and to reconsider its IPT strategy: “The pattern we are seeing is that far-reaching decisions that will ultimately impact the end buyer are being made in isolation. We urge policymakers to take a holistic view of how these changes add up and, in light of Monday’s announcement, we ask the Chancellor to refrain from further IPT rises this year.”
She added: “In a low growth environment, it can be a challenge for our members to justify insurance premiums to their business, and even a small impact on price could have a disproportionately negative impact on insurance purchase.”