Insurance tax hike sees health cover drop 10%
Data from the Association of British Insurers (ABI) reveals that the number of people covered by personal health insurance has dropped to 1.2 million.
This is a fall of 10% between 2015 and 2019. The total number of people covered by health insurance (group schemes) has also fallen to 4.7 million, nearly 300,000 fewer people than four years ago.
And the number of people covered by corporate health insurance also fell to 3.5 million, a fall of over 5% in four years.
The declines correspond with a hike in Insurance Premium Tax (IPT). It’s a tax on general insurance products which is often passed on to consumers in the form of higher premiums.
In 2015, IPT stood at 6%, before rising to 9.5%, then 10% and now currently sits at 12% as of June 2017.
The ABI data also revealed that average health insurance premiums rose by nearly 15% for personal health insurance and over 8% for corporate health insurance.
As well as an increase in IPT, there have been significant increases in medical costs driven by the use technology and new treatments. These costs are expected to carry on rising, the association said.
As such, it is urging the government to reduce the rate of IPT which would also lessen the burden on an already stretched NHS.
In the four years to 2019, health insurers paid out over £10bn in claims, including for cancer, mental illness and cardiovascular treatment.
Roshani Hill, head of protection and health at the ABI, said: “Private health insurers pay out on average £7 million a day, helping people get the treatment they need where and when they want it. As well as providing a vital service to millions of people, health insurance also provides much needed relief to an overburdened NHS. This makes increasing Insurance Premium Tax and driving people away from health insurance a false economy.
“Insurance Premium Tax has doubled since 2015, giving the UK one of the highest rates in Europe. It is time to give responsible people a break and cut the tax on insurance.”