insurethebox, pioneer of UK telematics insurance, is lending its voice to the chorus of concern around Insurance Premium Tax (IPT) on motor insurance. In particular, the company is concerned that new Chancellor of the Exchequer, Rishi Sunak, did not take action in today’s Budget to make a real difference to road safety by reducing or exempting IPT on telematics policies.
BIBA (The British Insurance Brokers Association) was outspoken in its 2020 Road Safety Manifesto, published weeks before the Budget, issuing a call to action for the Government to increase on-street safety by giving greater incentives to use telematics policies.
One way to encourage young, inexperienced drivers to move to telematics is to provide them with IPT relief. However, research from BIBA shows that ever since IPT costs doubled between 2014 and 2017, young drivers have been hit the hardest. A typical young driver paying for a £1250 policy will have seen their IPT tax rocket from £75 to £150 between 2015 and 2017, which BIBA has described as ‘clearly unsustainable’.
With the House of Commons Transport Committee advising that drivers between the ages of 17 and 24 account for just 7% of the licence holders in the UK but are involved in 20% of fatal and serious collisions, insurethebox believes the need to make it easier for young drivers to benefit from telematics technology is unquestionable.
Warren Hetz, Commercial Director at Aioi Nissay Dowa UK, the parent company of insurethebox, said: “The data acquired through telematics insurance not only protects lives, but helps reduce the pressure on emergency services and saves the Government money every year. It’s disappointing, therefore, that this wasn’t recognized in today’s Budget.
“It is crucial that we motivate young and inexperienced drivers to choose telematics-based insurance for those safety advantages. They will not however, be persuaded to do so en masse unless they can see a clear financial benefit.”
REACTION FROM DWF LAW
Commenting on the transport announcements by the Chancellor, Jonathan Moss, head of transport at DWF said:
“Rishi Sunak’s debut Budget is delivered amidst the backdrop of the Covid-19 pandemic and is the first since the UK’s departure from the EU. While the UK economy continues to face unprecedented challenges, the Budget introduces new funding to develop investment in roads, railways and digital networks. The second Road Investment Strategy (‘RIS2’) – a motorway and major A road investment project will commit £27 billion of public funds in the period 2020 to 2025.
The Government also intends to invest £20 million to develop the Midlands Rail Hub and to allocate £1 billion in cities’ transport, from the Transforming Cities Fund.
“In the year that the UK looks to hold the COP26 UN Climate Summit, the Budget introduces tangible steps to decarbonise the economy, while protecting the UK’s natural heritage. RIS2 will be rolled out in synchronisation with consumer incentives to support innovative transport technology including £500 million to support fast-charging hubs for electric vehicles, £304 million to reduce nitrogen dioxide emissions.
The Chancellor announced he will remove the entitlement to use red diesel from April 2022 except in agriculture, fish farming, rail, and non-commercial heating.
Finally, on entering a new decade with a new Budget, Rishi Sunak has shown that he wishes to direct the UK towards sustaining low carbon transport, natural climate solutions and carbon capture and storage. With fuel duty remaining frozen for the tenth year in a row, there is debate about whether the initiatives will go far enough to meet net-zero target aims.”