Insurance Premium Tax (IPT) has now hit 12% – the third increase in just two years, as the government identifies another soft target to help increase revenues. We caught up with Phil Cowell – chartered Insurance broker and director of IFM Select – who shared some expert advice and guidance for business managersThis tax, first introduced in 1994 at just 2.5%, puts further strain on business managers already facing unprecedented pressures due to the schools’ funding crisis.
The increase will be added to premiums and, although small in percentage terms, it could lead to big problems for many, according to chartered insurance broker, Phil Cowell of IFM Select. “Educational establishments paying significant premiums whilst struggling to stretch their budget might look to reduce their premiums,” Phil explains. “However, there is a risk they could be under-insured as a result.
“Before chancing this path, I recommend reviewing all options available to secure the most cost-effective policy without affecting the cover it provides.”
Here is Phil’s expert advice on steering a course through this insurance issue:
Although loyalty is nice, it can be taken for granted, which is why it’s important to challenge your insurers on occasion. Some insurers and brokers may hope their clients are too busy to assess what’s on offer and will simply accept their first renewal offer.
Getting alternative quotes each year can be time-consuming and will sometimes prove counterproductive. Some insurers won’t quote if they feel their prices will only be used to reduce the premium of the holding insurer.
It’s also a good idea to ask your broker to market your business every few years. The most professional insurance brokers will do this regularly so you can be confident of receiving the best value without having to ask.
Increasing your policy excess
If you have a history of making no claims, or claims for a small amount, and currently have a relatively low policy excess, you might want to consider increasing that excess.
A larger excess should deliver a discount on the premium and again this will, hopefully, cover the likely increase following the IPT rise.
Over time, schools and academies will undoubtedly make improvements – for example, you may introduce new health and safety procedures or increase security.
Unless you regularly update your broker or insurer on such changes – which are likely to reduce your risk of a claim – it is unlikely the changes will lead to a reduction in your premium. Remember, they are there to help you and your business.
Any now irrelevant extras?
In the past your school may have needed additional cover that is no longer needed. Ask your broker to sit down with you and assess every aspect of your policy to ensure that you not only have the right level of cover but are only paying for what you need.
There are insurers that offer discounts if you agree to a longer-term policy. It’s still important to review your cover each year because, even though insurers will often guarantee rates, any further IPT increases would still apply.
You can often negotiate additional benefits too, including a contribution to improvements you’d like to make that may reduce risk.
Do something about it
Unfortunately, there’s no avoiding the IPT increase but there’s plenty you can do that might reduce your premium by as much as the increase, or more.
Whatever you choose to do, remember that the ones most likely to feel the full impact of the increase are those who do nothing.