Further IPT rises a threat to public and charity sectors, Zurich Municipal warns
- Nine in ten surveyed would suffer negative financial impact
- Nearly half (43%) of all respondents said a further rise in IPT would affect their organisation's ability to adequately insure itself against all the risks they face
- Just under half of respondents (46%) would be forced to reduce or cancel cover on some risks if IPT rose to 20%
- Councils and charities would be forced to reduce or remove some services, change their reserve levels, make job cuts or cut budgets elsewhere to afford the cost of insurance if IPT was further increased
Ahead of the Budget announcement in just a few days’ time, Zurich Municipal warns the Government that further increases to the Insurance Premium Tax (IPT) would further expose the already struggling to make ends meet public and charity sectors to much higher financial losses from insurance claims.
A study* carried out by one of the largest public sector insurers highlighted the string of unintended consequences any further IPT rises would impose on local authorities, housing and education establishments as well as charities in the UK. Nine in ten of all respondents indicated that it would negatively impact them financially and nearly half (43%) said it would affect their organisation’s ability to adequately insure itself against all the risks they face.
If IPT rose to 20%, the same level as VAT, nearly half of those surveyed (46%) would be forced to reduce or cancel cover on some risks, two in five would be forced to increase excesses and deductibles, and three in five would have to review the overall level of cover.
In terms of an overall impact on the public and charitable organisations, in order to afford to buy adequate insurance cover if IPT rose to 20%, over a third of respondents (35%) would be forced to further reduce or withdraw some services, over a quarter would have to make changes to their organisation’s reserve levels, two in five would cut budgets elsewhere and one in ten would consider making job cuts.
Commenting on the study findings Andrew Jepp, Managing Director at Zurich Municipal, said: “We are urging the Government to stop any further increases to the Insurance Premium Tax for the public and charity sectors. To them, any further rises to IPT equal financial penalty for doing the right thing and protecting themselves against the unique risks they face. The unintended consequences of this tax will only mean an increased level of vulnerability to larger financial losses when the unfortunate happens.”