UK Insurers Call IMF Insurance Tax Proposals ‘Inappropriate’

April 26, 2010

In a response to reports that the International Monetary Fund (IMF) is planning a new levy on all financial institutions, not just banks, Kerrie Kelly, the Director General of the Association of British Insurers issued a stament opposing the initiative.

“It is important that the financial system is made safe, but it needs measures that are focused where the risks exist,” Kelly stated. “Insurers were not a source of failure and their business model means they are not subject to the types of credit and liquidity risks that destroyed so many banks. Any inclusion of insurers within the scope of levies designed to impact on banks is essentially inappropriate and not justified.”

In addition to removing the insurance industry from proposals for a bank bailout fund, the ABI also called on the IMF and G20 to consider the following:
— The need to ring fence any bailout funds so that they cannot be used for general public expenditure;
— How bailout funds would be apportioned across the EU and international borders;

The ABI pointed out that ‘bailout funds must be built up over time and should not be levied in such a way that damages companies as they continue working to emerge from this financial recession.”

Source: Association of British Insurers

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