Home insurance premiums edging up
The cost of home insurance rose by 2% in the second quarter of 2018 after insurance premium tax rose to 12% in June.
AA’s latest benchmark British Insurance Premium Index found the average life insurance quote costed £157.59 in Q2.
Mike Lloyd, the AA’s director of insurance says: “There is no doubt that home insurance continues to be extremely competitive and the average quoted Shoparound premium for a combined policy is about £19 less than it was four years ago.
“But the recent rises are wholly attributable to the doubling of insurance premium tax in less than two years, from 6% in October 2015 to 12% from 1st June this year.
“The Treasury has pointed out that IPT is higher in other European countries such as France and Germany and I fear that there will be a further increase in the Autumn Budget to prop up the governments crumbling finances.
“This is a sneaky tax that punishes people who do the right thing by protecting their homes and cars.”
AA said insurance costs are rising faster than premiums, which in the long-term is unsustainable.
Lloyd added: “There is an important difference between the UK and Europe.
“Most countries’ IPT pays for regulation of the insurance industry.
“But in the UK, insurers are expected to pay direct for their own regulation and pay IPT which, apart from just 0.5% used to help finance flood defences, goes straight into the Treasury’s coffers.”