In July 2015, Impounded Car Insurance UK reported how an increase in insurance premium tax (IPT) had been announced to come into effect from November 2015.Now we’ll take a look at how insurance premiums have been affected by what many are calling George Osborne’s “stealth tax” from the summer budget.
According to the AA’s car insurance index, the average cost of car insurance has risen by over £100. The data shows that premiums had risen on average by an astonishing 10% in the three months since the IPT increase came into effect. That means that the average yearly cost of car insurance is up by £105.64, to £625.70; the biggest increase in premiums since 2010.
The AA are blaming this large rise in premiums on the increased insurance premium tax, as the additional costs are being directly footed by motorists.
As the recent IPT increase is a percentage of the total premium, drivers who were already paying more for insurance, such as young drivers or drivers with convictions, have been hit hardest. If you have comitted an offence severe enough to have your car seized by the police, many insurance firms will refuse to offer you any level of cover as you will be seen as a high risk motorist. Impounded car insurance is a specialst product and speaking to a broker is the best way to get an affordable policy.
The IPT increase has affected over 7 million insurance policies since it’s inception in November and is set to earn the Trasury over £8b in the next 5 years. When an announcement was made in July about this increase, George Osborne was accused of trying to slip a “stealth tax” into the summer budget.
The director of AA insurance Michael Lloyd also partially blamed fraudulent injury claims for the increase in car insurance costs, saying “The UK suffers the unenviable reputation for being the ‘whiplash capital of Europe’” and insinuating that aggressive calling campaigns from claims management firms added to the increasing problem.
It’s not the first time that false whiplash claims have been blamed for high insurance costs; Impounded Car Insurance UK have reported on the issue several times, most recently back in August.
A recent AA survey highlighted the severity of the problem by showing that around one in ten motorists thought it would be acceptable to claim on their insurance after an accident even if they had not been legitimately injured as a result.
The Government has recently shown support for new measures that will be taken by the Insurance Taskforce (IFT) to combat fraudulent insurance claims, and the AA say tougher action against offenders should help to bring down the cost of car insurance in the long term.
