The Association of British Insurers has called on the Government to cut the Insurance Premium Tax (IPT) in the upcoming Budget which holds “hidden” fees that thousands of Brits pay on their car insurance.
IPT is a tax levied on insurers which gets passed down to the customer and is covered in general insurance premiums including motor policies.
It has doubled to 12 per cent since October 2015, making it more expensive for drivers to be covered.
As the Budget announcement edges closer, the association explained that it's high time the Government "unmasked" this tax which it said penalises people and businesses for being responsible.
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The petition has already amassed over 19,000 signatures
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Mervyn Skeet, director of general insurance policy at the ABI, said: “This tax hits the poorest hardest because they typically spend more on insurance, such as home and motor cover, as a proportion of their income. We should cut IPT now."
Skeet added that there has never been a better time for the Government to show its support for drivers and families who do the right thing by buying insurance.
This sentiment was supported by a recent petition which called on the Government to establish a commission to investigate extortionate car insurance price rises.
The petition, which was launched by Alexander Ray Salman, has already amassed over 19,000 signatures.
Salman warned how car insurance prices have become increasingly more expensive since the pandemic, surpassing pre-pandemic average costs despite a general reduction of road-related deaths.
He argued that the Government should introduce a commission to investigate the regulatory practices of car insurance pricing and to ensure fair competition.
It was suggested that a potential commission could look at alternative models such as one practice in Canada whereby car insurance is a Government-owned and operated system.
Salman said a similar system in the UK could not only provide a potential additional revenue stream for the Government but also limit the financial hardship caused by purchasing third party insurance from private companies.
Because the petition has surpassed over 10,000 signatures, it prompted a response from HM Treasury.
The response detailed how the Government is aware of the current increases in the cost of motor insurance for many households, as well as the challenges facing Britons due to the increased cost of living.
However, the statement argued that it’s not up to the Government to prescribe the terms, conditions or prices that insurance companies set when offering insurance.
HM Treasury said: “At present there are wider economic factors, such as the increased costs of materials and labour in supply chains, that are contributing to increases in claims costs and therefore insurance premiums.
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If it receives 100,000 signatures, it will be debated in the House of Commons
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“The Government does not intend to intervene in these commercial decisions as this could damage competition in the market.”
The petition will run until March 20 and if it receives 100,000 signatures, it will be debated in the House of Commons.