Chancellor of the Exchequer Rishi Sunak relased the UK Budget for 2020 which includes a £30bn ($38.8bn) fiscal stimulus to help the economy combat coronavirus. However, does the budget help insurance at all in 2020? Patrick Brusnahan speaks to the experts
Matt Smith, financial services tax adviser, Mazars
The government has proved that it is receptive to genuine concerns posed by the life insurance sector. It has responded to industry representations warning against imposing capital loss restrictions being implemented on life insurance business that could have substantial losses. It has provided them with an exemption from the new capital loss restriction rules that are coming into effect. Now isolated from a major potential impact, many in the sector will today be breathing a sigh of relief.
Steve White, CEO, British Insurance Brokers’ Association
We welcome new Chancellor, Rishi Sunak’s approach to Insurance Premium Tax (IPT). Not changing the current rate – already at a significant 12 pence in the pound of every premium paid will help businesses and consumers to afford the insurance protection they need We will, however, bear in mind that the Chancellor has not explicitly frozen the rate and we will continue to campaign for Government to freeze, if not reduce, the rate of IPT for the remainder of this Parliament.
We will also continue to highlight to the highest levels of Government the dire consequences of a tax that potentially reduces access to insurance. In our 2020 Manifesto – Access, BIBA highlighted research by Zurich that shows a correlation between steady increases in IPT and a decline in the uptake of insurance. Because of this, as well as freezing the rate we believe targeted tax relief on both cyber insurance and telematics-based motor insurance would alleviate this trend.
David Sinclair, Director, International Longevity Centre UK (ILC)
The Government has yet again missed an opportunity to recognise the enormity of the policy challenges which come from us living increasingly longer lives.
We are failing to maximise the economic potential of longer lives; we are failing to invest in preventing ill health; social care is in crisis; and we know pensioner poverty will start to increase.
We have no comprehensive plan of action to respond to the challenges of demographic change.
At the same time, we continue to fail to invest seriously to make the most of the potential social and economic opportunity of longevity.
The Coronavirus crisis highlights how we have been far too complacent about the impact of infectious diseases despite the fact a major pandemic has been increasingly likely.
In the short term there is an immediate need to invest to protect our most vulnerable citizens and ensure our health care system can cope. We very much welcome the Government commitment to ensure the NHS will have the funding it needs.
But over the next few years we need to significantly push more health spending towards the prevention of ill health. Investing in the prevention of ill health will result in fewer vulnerable people when the next crisis happens. It is also key to help the Government achieve its ambitious goal of ensuring people can enjoy at least 5 extra healthy, independent years of life by 2035.
Longevity could offer a huge economic return for UK PLC. By 2040, over-50s could be spending 63p in every pound. And supporting people to spend or work for longer could add 2% to UK GDP every year.
Yet the cost of lost productivity as a result of largely preventable diseases already exceeds £500 billion in better off countries every year.”
“We won’t deliver an economic longevity dividend without investing in health systems.
The lack of commitments on adult social care are a real concern. The system is already in crisis. A commitment to cross party talks on the funding of social care may be welcome, but it must not kick spending decisions into the long grass again. Inaction and delay by successive Governments have created a crisis which requires an urgent solution.