AMII Warns of Consequences of Health Insurance Tax Rise

The Association of Medical Insurance Intermediaries (AMII) has warned the government that they risk placing extra pressure on the National Health Service if they increase the rate of insurance premium tax . With the new coalition government looking for extra sources of revenue as they set out to reduce the national deficit, insurance premium tax is expected to be seen as an easy source of additional income. Insurers fear that insurance premium tax may be doubled to 10 per cent as part of the new budget – a move which would net the government an additional £6 billion in revenues annually. The move would increase the cost of premiums on all forms of insurance, including home insurance, car insurance and private medical insurance .

The current 5 per cent insurance premium tax currently nets the government £2.3 billion each year, and while analysts generally concur on the likelihood of the 5 per cent rate being doubled, it has been suggested that the tax could be increased to as much as 17.5 per cent – the tax rate imposed on travel insurance policies and extended warranties .

Chairman of the AMII, Andrew Trip, has criticised the proposals, labelling them ‘short-sighted’, suggesting that it would increase the pressure on the National Health Service, as would-be health insurance policyholders decide against taking out policies to cover their medical costs, instead relying on NHS hospitals .