What insurers should expect from Labour’s Budget

Ahead of chancellor Rachel Reeves first Budget on 30 October, Natalie Larnder, head of market affairs at Keoghs, Matthew Connell, director of policy and public affairs at the Chartered Insurance Institute, and Shayne Halfpenny-Ray, head of policy and public affairs at the British Insurance Brokers’ Association, gathered in Post’s studio to discuss what insurers can expect from the Labour government after the party's landslide general election victory.

While all agreed tax hikes were on the horizon, Connell was hopeful that Labour would realise an increase to insurance premium tax would have harsher impact on the worse-off in society.

He said: “With insurance premium tax there is a special case to be made. We don’t want the cost of insurance to fall unfairly on people. It has got to be based on the risk they present.

“Insurance premium tax, because if is a percentage of premiums, it is the people who are highest risk – and the organisations that are highest risk – that pay the highest tax.

“Often, the sad truth is the highest risk organisations and individuals aren’t necessarily able to mitigate their risk or change their behaviour to become a lower risk.

“[It is] a tax that comes in and adds insult to injury, in a way. The higher risk that are already paying more and then they have to pay more tax on top of it. That doesn’t seem like a very progressive approach.

“I think there is hope, for insurance premium tax in particular, because of those arguments about equity in particular that I think a Labour government, in particular, would be interested to hear.”

Halfpenny-Ray said the Labour party Manifesto talked about not raising taxes for working people.

He said motor and home insurance is paid by working people, agreeing with Connell that any hike in IPT would impact “the most vulnerable” in society.

The trio also consider whether Labour’s probe into the increasing cost of motor insurance could be kicked into the long grass, what impact an uptick in capital gains tax could have on mergers and acquisitions, plus whether insurers will invest in green energy.

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