A new study by Zurich Municipal, has found that public sector organisations and charities in the UK are being exposed to more risk in order to afford the cost of protection as a result of Insurance Premium Tax (IPT) rises from 6% to 12% since 2015.
The report notes that nearly a quarter of respondents (24.9%) no longer cover, or reduced cover, on some risks since 2015. The report was based on 238 responses from a survey of public and voluntary sector organisations. Of those who responded, 42% were local authorities, 11% schools, 19% social housing, 5% further education, 10% higher education and 13% charities.
Additionally, over a quarter (27%) of those surveyed said the IPT rise to 12% has forced them to increase excesses and deductibles in order to control their insurance premiums; retaining more risk and exposing themselves to higher overall costs in the event of claims.
With IPT doubling over the last three years, the survey found that nearly two in five (39%) public and third party organisations had to make tough decisions to cut budgets elsewhere in their organisation and nearly one in ten (9.4%) had to make job cuts in order to cover insurance costs.
To be able to protect their organisations, a further one in seven (16.2%) had to reduce some their services and more than one in ten (13.7%) decreased reserve levels. One in five (21%) have comparably less cover in place as a result of the IPT rises, which leaves them exposed to higher expenses from claims.
Andrew Jepp, Managing Director at Zurich Municipal has called on the Government to freeze IPT in the coming Budget.”