Why the ABI is getting Snippy on insurance premium tax

When it comes to a tax as nonsensical as IPT, I think we need something equally ‘out there’ to combat it. 

Those in the industry know what I’m about to say when I talk about why IPT should be cut. But importantly, most of the public won’t.

Taxing insurance punishes responsible behaviour. And as inflation has pushed up claims costs and therefore premiums, the fixed 12% (or in some cases 20%) has seriously exacerbated the issue. This tax adds £67 to the average motor insurance policy, rising to more than £100 if you include home cover too. It’s time for a cut.

Now I like a bit of frozen yoghurt as much as the next person. But do I think it’s as essential as being able to drive to work or being protected from £20,000 of storm damage to my roof? No, I don’t

“But how is this different to VAT?” some may ask (though again, reader, you’re likely to know).

Well, products deemed essential or otherwise worthwhile are often free of VAT. Prescriptions, sanitary products, basic foodstuffs, books, museum visits – you get the picture. All charged without VAT as a matter of policy.

Now I like a bit of frozen yoghurt as much as the next person. But do I think it’s as essential as being able to drive to work or being protected from £20,000 of storm damage to my roof? No, I don’t. 

But then again, I doubt frozen yoghurt tax would bring in £8bn a year.

But essential – or in the case of motor, mandatory – insurance products still incur a 12% surcharge from the exchequer. 

This impacts businesses too, whether they are insuring their premises or offering benefits like health cover to their employees.

So back to my original point.

For a ridiculous tax we’ve created a ridiculous (though adorable) new ‘team mascot’. Meet Snippy, the life-size pair of scissors, who’s not only a great singer, but is fully behind our campaign to ‘unmask’ IPT as the regressive tax that it is. 

You might recognise the style of the costume from a certain prime-time Saturday night TV show. And we may have teamed up with very specific designers to create the character. 

Although any similarity with 1990s Microsoft desktop assistant ‘Clippy’ is actually coincidental.

We’re appealing directly to consumers here. We want them to know that they’re being punished for making a responsible decision that protects themselves and their families from potentially devastating financial hardship. Insurance is the spine of the nation’s financial resilience, and we need to make that clear. 

This is a tax that impacts 84% of households. It is a prime target for alleviating people’s financial pressures and it makes far more sense than cutting alcohol duty or inheritance tax. 

Keep your eyes peeled for Snippy ‘out and about’. And if you agree with our argument and want to have Snippy adorn your social media or marketing channels, give us a shout and we’ll happily share. 

Hopefully this slightly left-field tactic cuts the mustard. Until then, we’ll stay snippy about IPT.