Insurance Premium Tax Increase

1 November 2015 is an important date to note in the diary for any current or would-be purchaser of insurance as the rate of Insurance Premium Tax (IPT) increases to 9.5% for any policies incepted or renewed on or after that date.

Before you sharpen your pitchfork, light a torch and summon a mob to protest outside the offices of your friendly, neighbourhood Insurance Broker, we would politely ask you to remember that between Byron Burgers, it was Mr Osborne’s decision to impose the 3.5% increase which was announced in the Summer budget. We remain a little surprised that there was not more noise made regarding the increase, but with our cynical heads on: they call it a “stealth tax” for a reason.

Whilst the existing rate of 20% IPT applicable to Travel Insurance remains unaltered, the new rate of IPT will impact upon any Car, Home or Business Insurance policies you have in place.

Looking for a sliver of a silver lining? 9.5% is still under half of the 20% IPT paid on all policies by our European chums.

What does this mean to you if you have already taken out an annual policy this year?

We have pulled together the information provided to us by a number of insurers and the rate split below appears to be the most common approach, however this may vary depending upon insurer, so if you are in any doubt, please consult your provider.  

Policy Period begins prior to 1 November 2015

Transaction	IPT Rate
New policy commencing prior to 1 November 2015	6%
Renewal commencing prior to 1 November 2015	6%
Mid Term Adjustment (MTA) generating additional premium and effective prior to 1 March 2016	6%
MTA generating additional premium and effective on or after 1 March 2016	9.5%
MTA or Cancellation generating a return premium at any point on a policy effective prior to 1 November 2015 (regardless of whether there have already been MTAs attracting additional premium and IPT at 9.5%)	6%

Policy period begins after 1 November 2015

Transaction	IPT Rate
New policy commencing on or after 1 November	9.5%
Renewal commencing on or after 1 November	9.5%
MTA generating additional premium and effective on or after 1 November 2015 (regardless of the policy effective date)	9.5%
MTA or Cancellation generating a return premium at any point on a policy effective on or after 1 November 2015	9.5%

Simpson & Parsons Insurance Consultants Ltd are a family-owned independent insurance broker based in Windermere and are regulated by the Financial Conduct Authority. 

Please consult our website for more information about our services. Alternatively, please call us on 015394 47387 to discuss your requirements.

Cynical about Under Insurance....

Take a look around your living room.

Take a good look at all of your worldly possessions and now start making a list of all of the items and their value. Compare this to the value that you are insured for on your Home and Contents Insurance and I’ll bet you a fun size Mars bar that you are underinsured.

A lot of people are. According to some estimates the average household in the UK is underinsured by 30%. Imagine not only losing all of your possessions, but also not being able to afford to replace them following a loss from Theft, Fire, Flood etc.

Most insurers will also apply the condition of average, which means that if you have insured for £25,000 but you should have insured for £50,000 you will probably receive less than 50% back on the value of your claim.

Don’t forget to adjust your Contents limit in the event that you inherit a family heirloom, jewellery, furniture or antiques and if you’re unsure about how much to insure them for, engage the services of a valuer.

Many home and contents insurers offer an “Unlimited” contents limit, which can be one way around the issue of under insurance, however if you’re buying online please check the quotation thoroughly to check that you are on the correct basis.

We’re biased, so we are always going to suggest that you engage the services of an insurance broker (preferably us) who can ensure that your policy is set up on the correct basis from day one.

There is a misconception that buying through a broker is more expensive and whilst this may sometimes be the case, the broker does add value and in addition to providing assistance in setting up your policy, the broker is also there to help walk you through the claims process.

We’ll sign off with a belter from Oscar Wilde:-

A cynic is one “…who knows the price of everything, and the value of nothing.” 

Cyber Security Breach Levels Increase (again)…

Cyber Security breach levels have risen again with 90% of large organisations and 74% of small businesses experiencing breaches in the past year. These numbers are up on last years of 81% and 60% respectively.

69% of large organisations and 38% of small organisations reported attacks by unauthorised outsiders.

The actual cost of a breach continues to soar with the average cost for a large organisation somewhere between £1.46m-£3.14m and £75k-£311k for small businesses.

Rather alarmingly just 39% of large organisations and 27% of small business have Cyber Liability Insurance in place.

To put this into context, the number of security breaches is increasing, the cost of the breaches is doubling, but fewer businesses and organisations are taking out a policy which would cover the costs following these attacks!

Cyber Liability Insurance is much the same as with normal business insurance. There is an up-front cost attached that might never be recouped, but this is a mere fraction of the cost that could be incurred following a breach.

Don’t be on the wrong side of the statistics, to find out how best to protect your business contact your insurance provider to discuss the policies available to you.

Edit 
18.09.15

It is anticipated that changes to the EU Data Protection Regulations will be finalised by the end of 2015. The Regulations are wide ranging and much needed, particularly in light of the recent Ashley Madison breach (who are unsurprisingly now being sued in an attempted class action). A key area of the proposed changes is that any data breach will need to be notified to the relevant data protection authority. Computer Weekly have produced a decent guide which tells you more.

Remember: The consequential costs incurred following a breach, can be insured! 

*All facts and figures sourced from HM Government 2015 Information Security Breaches Survey available here: http://www.pwc.co.uk/assets/pdf/2015-isbs-executive-summary-02.pdf