The rise in insurance premium tax (IPT) could put people off taking private health insurance and put further strain on the NHS, the chairman of fhe Association of Medical Insurers and Intermediaries (AMII) has warned.
Stuart Scullion said chancellor George Osborne’s announcement on 8 July that rates would rise from 6 per cent to 9.5 per cent would do nothing to help bridge the protection gap.
Mr Scullion said: “Making private insurance less attractive only puts additional strain on the NHS and the public purse.
“This has been proven in other models around the world where insurance is subsidised through taxation relief, typically saving the public finances up to three times the amount of relief provided.”
The rate rise will come into effect from 1 November and the government said the IPT standard rate would remain lower than that of many other EU member states.
Steve White, the chief executive of the British Insurance Brokers’ Association, said: “We are extremely disappointed in this rise in IPT, and insurance will become more expensive for the public as a result.”
Adviser view
Elliott Silk, head of employee benefits at Bristol-based Sanlam UK, said: “We may see companies increase excesses or limit the number of employees who are eligible for private medical insurance in order to keep costs under control.”
