The Association of British Insurers (ABI) has committed to looking in detail at the findings of a report which calls on the Financial Conduct Authority (FCA) to investigate the UK’s “poverty premium”, whereby those least well off often have to pay higher insurance rates for reasons out of their control.
In responding the ABI reiterated its call for tax breaks for insurance, highlighting that the current position was a regressive tax for people “doing the right thing”.
The report from the Social Market Foundation (SMF) released earlier today, warned higher premiums risked leaving the most vulnerable people least protected, while there was also criticism for a market that only worked for the heathy and the wealthy.
ABI director general Hannah Gurga (pictured) said: “Insurance is a vital safety net. Our members work hard to ensure competitively priced products are available to as many people as possible and recognise the financial pressures facing households at present.
“This report raises an important debate on the factors that can contribute to the poverty premium and how wider societal issues can have an impact on insurance costs.
“Insurance is priced on risk and so we agree on the need for the industry, government and other stakeholders to work together, and support the recommendation for government to consider an intervention on Insurance Premium Tax.
“We have long called for the rate to be frozen as it’s a regressive tax that penalises people for simply doing the right thing in taking out insurance.
“We will look at the findings in further detail and continue to discuss the issue with our members on the practical steps that can be taken, including our ongoing work to improve transparency and trust with customers.”
