Clients will have seen a hike in their renewal rates on health insurance, after the chancellor’s insurance premium tax came into force.
On 1 November, the increase in insurance premium tax rose from 6 per cent to 9.5 per cent, meaning clients whose premiums are coming up for renewal are facing higher payouts for this particular employee benefit.
The rise will affect most policies taken out or renewed after the beginning of November. Brett Hill, commercial director at The Health Insurance Group, said: “Between the IPT increase and the normal inflation of health insurance costs we are looking at increases across the market from around 10 per cent to as much as 15 per cent, before any allowance is made for a customer’s claims experience or age profile.”
He said that firms who wanted to used this as a benefit to attract staff would have to shop around more to find the best-value cover.
According to Mr Hill, although rates in the UK still remain lower than in many European countries, the increase could cause financial challenges for businesses.
Adviser view
Elliott Silk, head of employee benefits at national advisory firm Sanlam UK, said: “Employers offering PMI should brace themselves for a substantial rise in premiums because of the tax changes.
“Health-cash plans and dental insurance will also be affected by the increase in the standard rate of IPT, but PMI policyholders will bear the brunt of price rises, because the cost of this benefit is higher.”
