General Insurance Article - Industry comments on general aspects of the Budget

BIBA Ross Trustees and EY comment on general aspects of the Budget

 BIBA CEO Steve White, commenting on the Autumn Budget, said: “We welcome the fact that Rishi Sunak is leaving the rate of Insurance Premium Tax (IPT) untouched which is key BIBA manifesto aim. This is some comfort to insurance customers already facing premium increases for a variety of external reasons. However, tax remains a significant proportion of the cost of being responsible and we hope future spending reviews will recognise the road safety benefits of greater use of telematics-based policies by removing premium tax on these to increase their uptake. Similarly, Government’s own Cyber Security Breaches Survey 2021 highlighted that only 6% of businesses have a specific cyber insurance policy in place. Cyber risk is growing and removing or reducing IPT on cyber insurance policies would help improve uptake and broaden resilience.

 “Given the current risk of flooding in the UK which has prompted the creation of a joint initiative by BIBA, the ABI and Flood Re to form a Flood Insurance Directory, we were delighted to see that Government is committed to an additional £22m each year for the maintenance of flood defences. We were also pleased to see that Government is commissioning a new National Infrastructure Commission study on the effective management of surface water flooding in England, which will also consider the role of a range of interventions including both traditional built infrastructure and nature-based solutions. We hope to work closely with Government to help introduce more general and property specific resilience measures.

 “Finally in our post-Budget meeting with the team from Her Majesty’s Treasury, we had confirmation that the next Future Regulatory Framework Consultation can be expected imminently. We look forward to representing BIBA members’ views including our call for Government to introduce an international competitiveness objective on the FCA, the PRA and the CMA.”

 Commenting on today’s Budget, Pavan Bhardwaj, Trustee Director at Ross Trustees, said: “The Chancellor’s delivery of a pro-growth, pro-investment Budget reflects the government’s ambition to rebalance the economy towards emerging technologies and green infrastructure. The news that the Government plans to consult on changes to the regulatory charge cap on defined contribution pension schemes clearly feeds into this broader approach.
 “By loosening the current charge cap which applies to the vast majority of funds held in DC pensions, the Chancellor has his eye on an estimated £500 billion pool of funds which could potentially be directed into illiquid assets. Notwithstanding the record amounts of ‘dry powder’ already awaiting investment, the Chancellor hopes that by unlocking these funds, the additional supply of capital will ultimately create its own demand and the economy will benefit from the investment in longer term projects.
 “It is important that the consultation takes a serious view of the potential risks associated with the proposed strategy, as well as the necessary safeguards that will be required to protect savers from potentially opaque charging structures. The devil will be in the detail with regards to the success of this proposal and we look forward to contributing to the consultation in due course.”

 Anne Hamilton, Associate Partner in EY’s Financial Services Insurance Tax practice, comments: “Annuity providers in particular will welcome the confirmation in today’s Budget of a spreading period for the transitional impacts of IFRS 17 for tax purposes, although the period has not yet been confirmed. However, there is significant detail to be worked through for the rules to be in place ahead of the first interim reporting under IFRS17 in 2023, meaning the industry is still some way from having full clarity on the overall impact of the changes.”

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