The 3.5% hike in insurance premium tax (IPT) that came into effect at the beginning of November could be just “the tip of the iceberg” in terms of increasing insurance costs for truck operators, a leading commercial vehicle insurer has warned.
The rise, which was announced in the budget in July and affects a range of insurance policy types including motor insurance and national goods-in-transit (GIT) cover, as well as buildings, contents, public liability and employer’s liability policies, leaves IPT at 9.5%.
This will raise around £1.5bn of additional tax revenues a year from 2016 onwards.
The new rate of IPT is substantially above the 2.5% levied when it was first introduced in 1994.
Speaking to Motortransport.co.uk, Terry Marshell, MD of commercial vehicle insurance broker Anthony Jones (UK), warned it was unlikely to be the last increase in costs.
“If you look at what’s happening elsewhere in Europe, where you have an equivalent of IPT at 20%, I have no doubt this is the start of something yet to come,” he said. “I think the 9.5% is just the tip of the iceberg.”
Nor is IPT likely to be the only area of increase in insurance costs, predicted Marshell.
“The motor market is in turmoil – nobody is making any money out of commercial motor insurance and I think in 2016 there is a lot of pain coming,” he said.
James Dalton, director of general insurance policy at the Association of British Insurers (ABI), said insurance was “a financial safety net, not a luxury”.
He added: “While insurance remains one of the most competitive industries in the UK, its affordability can’t be taken for granted. Further tax increases must be avoided if insurance is to remain accessible for all.”
However, Nick Deal, manager, logistics development at the RHA, appeared unconcerned by the IPT hike. “I think essentially that while the tax is there, it is without doubt claims experience that concludes the size of fee for cover,” he said.
