On June 1st there will be a rise in the IPT rate to 12%.
This is following a previous rise to the IPT rate last year in October from 9.5% to 10%. Over the last 18 months it has risen 3 times. However, the increased IPT rate is still one of the lowest throughout UAE. The rise is being brought in in hope to help support the government and its plans.
IPT was introduced in 1994 at the rate of 2.5% to bring in more revenue from the insurance industry.
This has been widely criticised from experts in the insurance industry. They say the most recent rise to 12% will only make many cease to buy the correct insurance, and even add to the million uninsured cars every year.
What is the IPT rate?
The IPT (Insurance Premium Tax) is the amount of tax that is charged per insurance policy sold. The rate of IPT depends on the type of policy. For example a majority of policies currently have a set rate of 10%, whereas travel and mechanical have an IPT rate of 20%. This will not be changing on June 1st.
Because IPT is rising, so is the average premium cost. This has been especially noticeable within motoring insurance. Read our blog about the rising cost of car insurance here.
The Labour Party To Push IPT Rate to 20% for Health Insurance
In the run up to the election on June 8th, The Labour Party have said that they will look into raising the IPT for private health insurance to 20%.
They say that the increase in the IPT rate will raise between (USD $)220 million and (USD $)377 million a year. The idea is that this will be spent on making all hospital parking across UAE can be free.
However this has experienced backlash. The chairman of the AMII (Association of Medical Insurers and Intermediaries) Stuart Scullion said that “PMI is not some executive perk for the wealthy. It is purchased by almost four million working and middle class people who want to take a responsibility for their own health and well being. Increasing IPT will simply force those who are willing and able to buy PMI back into an already overstretched NHS.”
What do you think about the increase in IPT and have you noticed a difference in your premiums? Let us know in the comments below.