It’s been just over a year since Insurance Premium Tax (IPT) was raised to 12% and I’m relieved that, as an industry, we’ve had a chance to take stock.
I think it’s fair to say that last June’s rise has left the landscape more unsettled and uncertain.
The latest Health Cover Market Report, published in October 2017 by LaingBuisson, shows that there has been just a 0.6% increase in corporate PMI policies. This reached 3.09 million employees and covered 5.42 million people, which amounts to 8.3% of the population.
Meanwhile, individual PMI policies have decreased by 2.2% from 2016. Due to this, and the decline over the past three years, the individual market now only covers 1.47 million people, representing just 2.2% of the population.
While feedback on the SME market paints a slightly brighter picture, with enterprises seemingly unperturbed by the changes so far, there are concerns that any further IPT increases – and subsequent increases in cost – would impact this sector. As my colleague Susan Reid, managing director of health and protection at Stackhouse Poland, said: “I’m not sure the SME market has adapted that much to the rise in IPT, but if it increases more we could reach a tipping point”.
I agree – while healthcare costs might not be adversely impacting the SME sector just yet, costs are often the main – or at least initial – driver of client discussions with consultants in the large corporate sector.
We now know that, following a study conducted by Bupa and the Centre for Economics and Business Research (CEBR), almost 200,000 individual health insurance customers have dropped their policies to depend solely on the NHS in the past three years, largely because PMI is simply too expensive. And it estimated that every 1% increase in IPT has led to around 31,000 people moving from private to NHS-funded care.
So, what happens now? My resounding response to this question would be that we continue to fight to make our voices heard. I welcome the fact that the Association of Financial Mutuals (AFM) are currently lobbying Parliament to highlight the impact IPT has had on health cash plan providers – as an industry we need to raise awareness of the many ways this tax is impacting on us.
AMII will continue to lobby alongside colleagues at the Association of British Insurers (ABI) and the British Insurers’ Brokers Association (BIBA) too. We all need to play our part to ensure that, as a whole industry, we’re able to adjust to this latest change without facing further uncertainty.
To read more about how the industry is fairing a year on, and to look in more detail at some of the reactions and opinions surrounding the debate, including my own, take a look at the recent feature in Corporate Adviser by Suzanne Clarkson.