The British Insurance Brokers Association (BIBA) has called for a tax break for telematics-based insurance products after car premiums reached their highest levels in six years.
In the latest Insurance Price Index (IPT) from the BIBA and Acturis that tracks £5billion of actual premiums paid yearly through insurance brokers has highlighted a major rise in the level of premiums charged for private car policies.
According to BIBA’s latest insurance price index, premiums paid for private car insurance was beyond 11% in the second quarter when matched to the same period in 2015.
Motorists are paying 15% more for the same cover with the addition of insurance premium tax which itself skyrocketed to about 66.7%.
BIBA noted that this has been the highest level since the index began monitoring premiums in 2010.
Along with UK’s 3rd largest private car insurer, Ageas, BIBA is now urging the government to provide IPT relief on telematics insurance products to increase the reception among drivers aged 25 and below.
Ageas Insurance Chief Executive Officer, François-Xavier Boisseau said: “We believe that removing IPT on telematics products will increase the take up of these among younger drivers and that the resultant decrease in the number of road accidents would save the economy an estimated £370million over 7 years.”
Research has shown that there is a 40% drop in crash risk for new drivers that use a telematics device, said BIBA Executive Director Graeme Trudgill.
“Any incentive to use these policies will be a great boon for road safety. Removing IPT would increase this motivation, improve road safety and yet still have a net financial benefit to the economy over time so we will certainly be encouraging Treasury to consider this move”, Graeme Trudgill said.
Theo Duchen, Chief Executive of Acturis commented that continued pressures in the private car market have been causing premiums on an upward trend since 2014 and the surge in IPT highlights the premium hike for all motorists and particularly those already facing high premiums.
Trudgill further stated that the incidence of uninsured driving is also increasing in the younger age group and measures that help make cover more affordable could help reduce this trend. “We see no downside for implementing this tax break”, he concluded.