The UK government’s recently proposed budget contain a number of measures aimed at helping UK firms to increase their business, and to make them more competitive. As the UK’s insurance industry is one of the country’s most successful sectors, it stands to profit from many of the proposed measures.
Maggie Craig, Acting Director General of the Association of British Insurers (ABI) responded to the budget proposals in a generally positive manner. “Today’s Budget offers a dual route for growth – boosting long-term investment and securing a competitive UK tax regime,” she stated.
The ABI strongly welcomes “the two per cent reduction in corporation tax which will give the UK the lowest corporation tax rate in the G7,” she continued. “This is a real statement of intent that shows the UK is open for business.
In addition Craig noted that insurers “fully support the Green Investment Bank, and are uniquely placed to help as they invest for decades rather than years. We would have liked the Bank to have been able to access money markets from day one rather than wait until 2015, but we understand the reasons for a delay and welcome the additional funding.
“Progress on the taxation of foreign profits will bring the UK in line with international competitors. This is crucial for insurers as they align their businesses for massive regulatory change over the next 18 months ahead of the Solvency II regime going live in January 2013.”
Commenting on the implementation of Lord Young’s review of Health and Safety, Nick Starling, Director of General Insurance and Health, ABI, stated: “We welcome the Chancellor’s promise to implement in full Lord Young’s recommendations made in his health and safety legislation review. Lord Young rightly identified how badly interpreted or misunderstood regulation, bureaucracy and disreputable claims management firms have contributed to a compensation culture.
“Implementing these recommendations will create a culture of responsible risk taking by individuals and businesses, backed by proportionate health and safety regulation underpinned by insurance.
“This also means a clampdown on irresponsible claims management firms. Not only do they help fuel public belief that behind every accident there should be a claim, but they add costs to the legal system that ultimately are borne by all insurance customers.
“Lord Young’s recommendations coupled with full implementation of the recommendations of Lord Justice Jackson’s review into civil litigation, will lead to claimants getting fair compensation as quickly as possible and help insurers keep costs affordable for customers.”
Helen White, acting Director of Life and Savings of the ABI, added: “The intention to establish a flat-rate pension is an important move towards a simpler and more understandable pension system. It will help people plan for their retirement, stop people falling into the means-testing trap and ensure that it always pays to save. We look forward to working with the Government and other stakeholders to make these proposals work.”
Peter Vipond, Director of Financial Regulation and Taxation of the ABI, offered the following analysis of the government’s proposals to overhaul the tax system, describing it as “genuine progress.”
He explained that it is the “Government’s objective to make the UK tax system the most competitive in the G20. The revisions to the exemption for foreign branch profits will particularly help attract and retain insurers in the UK. This is important for UK insurers because the new EU-wide Solvency II regulations favor branch structures over subsidiary structures as they make more efficient use of capital.”
Starling added: “We understand the need for a more flexible and simple planning process, but changes must not lead to developments being granted planning permission in high flood risk areas. Planning, development and building systems all have a role to play in minimizing flood risk, and decisions must take account of proper flood risk management issues”
Dr. Rebecca Driver, Chief Economist and Director of Research at the ABI, stated: “It was very important that this budget set out a coherent strategy to underpin our long term growth, including ensuring that the UK’s tax regime is competitive. Overall, the Budget represents a positive step in creating a framework for long term growth. The important thing will be for the Government to implement its vision effectively over the coming years.”
Source: Association of British Insurers
Was this article valuable?
Here are more articles you may enjoy.