Insurance premium tax hike ‘will trigger switching surge’
The study by Consumer Intelligence found that 56 per cent of customers intend to switch, or will consider doing so, once the tax rise takes effect in November.
Chancellor George Osborne announced in his summer Budget this month that IPT will rise to 9.5 per cent from 6 per cent from November 2015. Although IPT is levied on insurance companies, the worry is the tax rise will be passed onto consumers through higher premiums.
Consumer Intelligence forecasts it will add £20 to the average motor policy, and £50 for drivers under-25.
The research, based on responses from more than 11,000 policyholders, found that 27 per cent of customers will cancel policies and/or reduce cover as a result of the IPT increase. However, 16 per cent of customers believe there is little point in moving as all insurers will be impacted.
Ian Hughes, chief executive of Consumer Intelligence, said: “The rise in insurance premium tax will have a massive impact with customers looking to move in response to premium rises which are nothing to do with insurers.
“The biggest concern is that people are considering cutting back or cancelling insurance policies in response to the price rises. It is an easy saving to make but could end up costing them and other road users more in the long run if the means more uninsured drivers.”