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Londoners react to tax hike by buying less insurance

A quarter of London-based consumers are already purchasing less insurance protection as a reaction to the insurance premium tax (IPT) rise announced at the summer budget.

The study of 1000 consumers, conducted by UNA, the organisation owned by 12 of the UK’s largest regional insurance brokers, found that 25% of Londoners are now buying less protection due to the announcement in July leaving themselves at risk of failing to make claims.

The insurance sector, which had reacted with disappointment to the announcement, had previously estimated the increase in the basic rate of IPT from 6% to 9.5% from November 2015 would add between £10 to £12 to the average buildings and contents policy, and between £12-£13 to an annual motor insurance bill

Despite not being introduced until November, London-based consumers are already pointing to the IPT rise as the reasoning behind their decision to not purchase certain forms of insurance protection.

In comparison, only those in Sheffield produced similar statistics with 18% saying there are buying less protection. The number drops significantly to 4% in Norwich; 6% in Plymouth; and 10% in Southampton.

An equally worrying statistic is that 40% of Londoners surveyed also claimed that they weren’t even aware of the IPT rise.

Tim Ryan, Executive Chairman at UNA, comments: “The IPT rise not only impacts private medical insurance, motor insurance, and buildings and contents insurance, but it also effects flexible benefit schemes and potentially the performance of SMEs.

“With many London-based consumers already admitting to purchasing less insurance as a result of the imminent rise, this is great cause for concern for them and the industry.

“With many also seemingly unaware of the IPT rise, some consumers will come in for a nasty shock when it comes to renewing policies and when the new rate takes effect from November 2015.”

This was posted in Bdaily's Members' News section by Ellen Forster .