Customers penalised by insurance premium tax

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When it comes to making an insurance purchase, generally people are looking for two things: price and cover. Finding the right balance between these two factors is essential when trying to get the right policy and it has to be said that price is probably the main factor for many people.

What many customers don’t know, however, is that they are charged a massive 17.5% IPT (Insurance Premium Tax) whenever they purchase travel insurance, pushing the premiums up significantly. When travel insurance is such an important part of any trip abroad and people are constantly reminded of what can happen without it, PJ Hayman has now announced that it thinks IPT is unfairly penalising customers who should be able to get cheaper deals.

The insurance provider has now called on the government to cut the rate down to the same as that charged on other types of insurance. In comparison, home and car insurance both have an IPT 12.5% lower than travel insurance. According to the company, the high rate of IPT was only introduced to prevent travel agents from providing discounts to their customers if travel insurance was purchased alongside the holiday, but it has stuck around and the system is now unfair.

Peter Hayman, the director of PJ Hayman, says that because sales from agents are lower now than they were in the past, “there is now an unfair tax on travellers”. He has described IPT as being “shockingly high”, especially with VAT at 15%. It’s not certain yet whether this plea will fall on deaf ears, but if there is a change in policy then we could hopefully be seeing the premiums come down by a fair amount in the future.


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