Support the IPT freeze

As a way of combatting a decrease in the money the government takes from fuel duty, there is a real concern in the insurance industry that Phillip Hammond plans to put a rise in Insurance Premium Tax in his next budget.

IPT, which currently stands at 12%, is a tax on premiums paid by the policyholder.

It has already risen in the considerably in the last two years; doubling from 6% to 12%. That, according to BIBA shows an increase larger than that of tobacco and alcohol duties.

Romero Insurance Brokers suggest that any rise in IPT would be grossly unfair and potentially dangerous.

Insurance is vital for any business, no matter the size, and an increase in costs could squeeze some bottom lines to breaking point. Or even more worryingly, some would avoid paying for insurance altogether.

You shouldn’t be penalised for doing the right thing.

There have already been calls from insurer, Ecclesiastical and the Charity Finance Group to make charities exempt from paying the tax. But if it’s unfair for charities to pay IPT, detractors could also argue that it’s unfair for 3rd sector contractors, businesses with low profits and those with high premiums after a series of no-fault claims, to pay.

Romero MD, Simon Mabb, had these words on the matter:

The government have increased the Insurance Premium Tax rate in the last few years from the original 2.5% when first introduced to 12%.  This has been an extra source of revenue for the tax man but this is now affecting customer’s insurance purchasing decisions which can’t be right.  The 12% rate is excessive and on motor business the government is taking more in tax than the broker that is arranging the cover, advising the customer on cover and assisting with claims.  The broker is also having to fund regulation costs from their income as well.  We regularly see customers that need specialist covers, for example, flood cover, that are just priced out of taking this with the additional 12% tax on top.  Likewise a young driver paying £2,000 for their insurance premium is paying a further £240 in Insurance Premium Tax. 

There is talk of the government looking to raise this 12% higher still in the next budget and this is something we all need to be vocal about.  The insurance industry and the end customers alike.  At the end of the day it is wrong to penalise people for doing the responsible thing, which is why we’re calling for an end to rises in Insurance Premium Tax which is a tax on the consumer not a tax on insurers as has been portrayed by the government with previous increases.

If you feel as strongly as we do about freezing IPT, it’s important that you lobby your MP and make your voice heard. This proposed rise is unfair and anti-growth, and must be stopped.

You can follow the #IPTsUnfair hashtag on Twitter for the latest updates.

Directors and Officers Claims Trends: How is D&O changing as we head towards 2020?

At Romero Insurance Brokers, we look at every case individually and assess the requirement of each company for each type of insurance. We make sure that our clients are covered for all eventualities. We know what a large impact even a single claim can have on your business, so making sure you’re financially protected is the first line of defence.

In our latest article, we look at the how D&O claims will change and evolve in the near future. This article features comment on changing regulations, a growing claims culture and increasing costs. If you have any thoughts on anything you read below, we’d love to hear them! Contact us today via the contact information at the top of this page or find us on LinkedIn, Facebook and Twitter.

Regulations tighten, but people are still people.

The attitude of a claimant drives the claim, and sometimes the actual merit of the case takes a back seat. No matter how blameless the defendant, determined claimants taking action without legal action can incur thousands in costs and drags cases over months and sometimes years.

Contract disputes will always be a major part of everyday business

In a slightly frustrating continuing trend, D&O claims from contract disputes will probably continue indefinitely. There will always be a supplier or purchaser who isn’t happy with a certain product and service, and no matter how blameless the other party, people don’t like paying if they don’t think they’re getting value for money.

Depending on the insurer, there are different levels of cover in D&O depending on the dispute. It’s vital in this area that you study your policy wording. We work with a large panel of British insurers, all of whom have their own definitions of what would be covered under their D&O policies for contract disputes. Some may cover simple contract disputes, but it’s rare. It’s likely that your circumstances will have to meet a certain number of specified criteria. If you’d like us to help you examine your policy in more detail, or explain the ins and outs, please don’t hesitate to get in touch.

In the age of social media and digital footprints, bad news travels fast.

With today’s technology and the immediate and public access customers have to companies, PR and reputational protection is important. We have seen recent examples, such as the multiple profit warnings at Provident Financial in 2017, where thousands of disgruntled customers and employees have taken to social media and other PR channels to vent anger.

If the reputational damage is a result of mistake or breach of duty of a director or officer, the financial implications for the business could be huge.

As more and more people become digitally literate, and the economic and ethical performance of companies is more open to the public, D&O protection of this kind is a growing requirement.

Changes in insolvency rules will increase claims against D&O.

As the number of company and individual insolvencies continues to rise, it’s predicted that claims against D&O insurance will do the same. Changes in the rules regarding insolvencies have led to more focus on the behaviour of directors (who now have to have their previous 3 years conduct examined, not 2) and shadow directors (who were previously hidden from scrutiny). The Insolvency service also now have longer (3 years instead of 2) to bring about action.

HSE fine levels will increase the financial repercussions of health and safety breaches.

Recent regulatory changes now allow the HSE to hand out larger fines to companies that are found to have been in constant or serious breach of health and safety law. Whether through causation or correlation, the number of fines over £1m in 2017 was more than the previous 20 years put together.

HSE investigations and prosecutions were already a frequent source of D&O claims. We’re possibly set for a cat and mouse game of the HSE chasing more prosecutions because of bigger fines, and the companies themselves taking health and safety and the avoidance of such prosecutions more seriously.

Breach of fiduciary duties claims will grow, but still create big grey areas.

The number of claims by investors against directors failing to fulfil their fiduciary duties has risen. Many fiduciary duties are vague and can incorporate many aspects, so whether or not an individual has fulfilled or is in breach of their duties, is often debatable. Prime and common examples of these type of claims include dual interest (where having interests in another company hinders performance for the business in question), upholding the positive image of a brand or irresponsible pay outs for former employees or contractors.

It’s become more expensive to fight D&O claims

Alongside a rise in claims culture, the cost of defence and barristers is increasing. As the waters of D&O claims become murkier and murkier, claims that would once have been settled out of court via legal advisers are no requiring the support of barristers and other expensive defence personnel. And with more information and data available to claimants and defendants than ever before, more hours are required to examine all evidence.

In this article, we looked at the latest report by AIG into the changing landscape of D&O insurance. For the full article from AIG, click here.