A petition has been launched to lobby the government against the forthcoming rise in Insurance Premium Tax (IPT) and its “potentially catastrophic impact” on the industry.
The petition was announced by the Association of Medical Insurers and Intermediaries (AMII) at its Annual General Meeting on 22 March to oppose a planned hike IPT from 10 per cent to 12 per cent, due to come into effect on 1 June.
After the government failed to offer any concessions over the proposed hike in the March budget, AMII is hoping to reach the 100,000 signature threshold needed to trigger a parliamentary debate on the issue.
Chairman Stuart Scullion said: “If we do not stand up and make our voice heard, there is a worry that the government will continue to increase IPT, and this could have a potentially catastrophic impact.
“Increases in IPT affect the NHS as much as the private health sector. With the taxman taking an additional £120 in IPT for every £1,000 premium charged it is no wonder some buyers of health insurance and health cash plans are saying ‘enough is enough’, cancelling their PMI and relying on an already overstretched NHS.
“I’m concerned that if we don’t speak up now, IPT could reach 20 per cent by 2020 if not sooner.”
Speaking at the AGM, Alex Perry, chief executive of Bupa Insurance, called IPT on health insurance “unfair and counterproductive”.
He continued: “The government’s loading of tax onto health insurance has already seen the number of people who pay for health insurance themselves shrink by a third since 1997.
“This means more than half a million more people fully dependent on an overstretched NHS. Further increases in IPT will push some people to the limit of what they can afford.”
Emma Thomson, life office relationship director at LifeSearch, commented: “The increase to IPT is disappointing as consumers should not be penalised for making responsible decisions about their healthcare.
“At a time of increasing pressures on the NHS, the premium increase for PMI policyholders could force some people to cancel cover, burdening the NHS even further.”
But Mike Williams, director at Hertfordshire-based Chamberlain Stean and West, said he did not expect the petition to have a significant impact on the government’s plans.
He added: “The government has slapped this charge on and if you have insurance, you have to pay it. It’s a fait accompli, really.”
simon.allin@ft.com
