Insurer WPA has called for a reduction in premiums despite repeated rises in the insurance premium tax over successive Budgets.
Charlie MacEwan, corporate communications director at WPA, said: “IPT is up again and I suspect that we are the only insurer to be pushing strategies that bring premiums down.
“For me, it is key that insurers communicate the value of medical insurance and all that they can do to keep premiums down and, in effect, reducing the impact of any rise in IPT.”
Fears of a big increase in insurance premium tax were allayed after chancellor George Osborne unveiled a smaller-than-expected rise in the Budget.
If the rate had risen to the feared 12.5 per cent, this would have represented an increase of 108 per cent over the past six months.
In the event, the chancellor upped the standard rate of IPT from 9.5 per cent up to 10 per cent, an increase expected to raise £700m from the insurance sector over the next five years.
Mr MacEwan said insurers and advisers need to minimize the impact of upward pressures on premiums.
“By having a conversation with customers about what they want their policy to achieve we can tweak the product, benefits, deductibles and premium so that they get what they want and their health insurance is valued,” he said.
Mr MacEwan said the company reminded individual customers at renewal about their options. These include Shared Responsibility, WPA’s co-payment mechanism, which can halve premiums while keeping benefits the same.
Cover also depends on where they are treated, for example, whether they need premium hospitals that are mainly in London, and employment status, with premiums discounted if a customer is self-employed or a professional.
Mr MacEwan said it was about structuring corporate healthcare strategies effectively, given that for every £1 a company spends on healthcare (claims fund, administration and insurance charge) they have to spend an additional 25p on taxation (IPT and employer’s NIC).
He said: “Employers are the back bone of the economy and an IPT increase is another incremental rise that is only going in one direction. For me, the smart employers are planning ahead.”
He said options to reduce the impact of another IPT increase include corporate healthcare trusts for companies that want to ‘self-insure’ their schemes.
Another option is corporate deductible, an HMRC-approved funding vehicle which mitigates the impact of such IPT. This has no change in cost or liability to the employer, no diminution in benefits to employees and no set-up costs.
Mr MacEwan said that for the SME market, deductibles can halve premiums while maintaining benefits.
Paul Howard, proprietor at Reading-based Box Financial Planning, said: “I have a client tomorrow who has a full policy of medical insurance and is fed up with spending £4000 a year. I have amended it to a six-week deferred policy which is more affordable. Most providers are trying to be quite vocal about IPT but the impact on general insurance will be little.”