Calls for flood defence cash and insurance tax cuts to ease cost of living

05 February 2024 , 15:59

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Homeowners struggling to obtain flood cover can now use a flood insurance directory (Image: PA Archive/PA Images)

The British Insurance Brokers' Association (Biba) has urged the Government to cut insurance tax and increase investment in flood defences.

They believe this could help households struggling with the cost-of-living crisis. Biba suggests reducing the insurance premium tax (IPT) from 12% to 10%. They also want buildings needing cladding remediation to be exempt from IPT, which adds £67 to the average motor premium.

The Association of British Insurers (ABI) recently revealed that the average premium for private motor insurance was £627 in the last quarter of 2023. Rising repair costs, including labour and energy bills, have increased prices. Biba also wants the higher 20% IPT rate on travel insurance to match the standard rate.

Graeme Trudgill, the boss of Biba, said: "We know individuals are struggling due to the cost of living, and this sits at the heart of our calls to action in our latest manifesto and our Budget submission. Recently there have been multiple stories about individuals cutting back on their insurance cover levels, or in extreme cases, cancelling cover entirely and we believe that these measures will make a difference."

To help households in flood-affected properties, Biba suggested that flood resilience materials should be free from VAT and a part of IPT receipts should be set aside to fund flood defence investments specifically.

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Mr Trudgill added: "2024 marks the start of the election year, and at a time when political parties are trying to appeal to the country for support, they need to consider the realities people are experiencing. Particularly when their key economic targets include growth and economic security."

"We believe the measures we have set out would help increase the attractiveness of insurance; deliver cost savings for individuals; and improve wider resilience against flooding. Ultimately, insurance brokers always have customer protection at the heart of what they do, and we believe the upcoming spring Budget is a great opportunity for the Government to act on this at a national level."

The spring Budget will take place on March 6. Homeowners who are finding it tough to get flood cover can now use a special flood insurance directory. This handy tool, created by Biba, the ABI and the Flood Re scheme, lists specialist flood insurance providers.

* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]

Lawrence Matheson