IPT stealth tax – the first of many rises
In July the chancellor presented his summer budget to parliament and in amongst the broadly positive and upbeat content was a tax increase nobody saw coming, a 50% increase in insurance premium tax. This is a tax that we all have to pay on general insurance premiums like car insurance and household insurance and the treasury has estimated that this increase from 6% to 9.5% will raise at least £2bn in additional tax revenues. The deadlines are tight as well with insurers being given until November 1st to implement the new tax with some additional transitional time being allowed for mid-term adjustments which have to be in place by April 1 next year.
Are we heading towards a period of increasing insurance premiums? Almost certainly because aside from the ipt hike, average household premiums have risen recently for the first time since 2012 possibly signalling an end to the continual falls we have seen. On top of this we have the Flood Re initiative coming in over the next 12-18 months which will add further to premiums and then we have the winter to get through with many predicting that a tough autumn and winter could trigger further rises in premiums.
Landlords brought into line
In 1988 just 8% of homes had a smoke alarm installed - today, 90% of homes are protected. However, October 2015 regulations will force landlords to ensure every tenant is protected.
According to Gov.uk the move will help prevent 26 deaths and 670 injuries per year.
The new rules will force landlords to ensure that a smoke alarm is installed on every floor of the property and that a carbon monoxide alarm is fitted in every room which contains a solid fuel burning combustion appliance, and that both of these devices are in proper working order at the start of any new tenancy something that I am sure will make its way into the tenancy agreement and probably the inventory check in order to comply.
Zurich appetite
RSA have confirmed that it has provisionally accepted a takeover bid from Zurich valued at £5.6bn and whilst this is a big deal, financially many analysts don’t expect it to impact the market significantly. RSA have been in turnaround mode for the last couple of years after some problems were uncovered in its Irish division which led to a £748m rights issue, possible vindication of the move by incoming chief executive Stephen Hester as observers comment that the takeover represents a fair price for investors. The new behemoth will probably focus on two main strands, the existing Zurich business on commercial lines taking advantage of RSA’s Scandinavian presence and the RSA element would probably focus on personal lines, something that Zurich has struggled with in recent years.
