BLM has responded to the outcome of the 2016 Budget, announced today by Chancellor George Osborne.
Mr Osborne said he is reporting on an economy set to grow faster than any other economy in the world. He observed that the British economy is stronger, it is growing, it is resilient, although “financial markets are turbulent and the outlook for the global economy is weak. It makes for a dangerous cocktail of risks, but one that Britain is well prepared to handle if we act now…”
Looking towards the impact of the Budget on the insurance industry, the Chancellor has announced that Insurance Premium Tax (IPT) will rise by a further 0.5% to 10% which will affect around 50 million car, household, pet and private medical insurance policies.
Commenting on the rise, Jonathan Clay, head of general insurance at BLM, said: “We are disappointed to see the increase in IPT announced in today’s Budget. This is now the second rise in just 12 months. Insurance is a critical part of organisations' risk management strategies. The purchase of it should be a strategic decision and an increase in price can militate against this.
"Whilst we are pleased that the government has committed to using the additional revenue on flood defences, after another winter of floods and storms such an increase in IPT may also prevent families from affording critical protection.
"We support the ABI’s stance and observations published today and feel it is important to identify the cost to both businesses and consumers that this change will bring."
Although not addressed during the Chancellor’s announcement today, the full Budget also includes new measures and incentives to support the growth of autonomous car technology in the UK. The government will conduct trials of driverless cars on the strategic road network by 2017 and consult this summer on sweeping away regulatory barriers to enable autonomous vehicles on England’s major roads.
Nick Rogers, partner and head of motor at BLM, said: “Today’s announcement that driverless vehicles, including HGVs, will be tested on UK motorways as soon as 2017 will be greeted with enthusiasm by many as a significant leap forward. The Government clearly wishes to promote the UK in this area of technological development, however, there is also much to think about in terms of the practicalities of driverless vehicles, particularly when it comes to liability and insurance.
"Take the commercial use of autonomous vehicles; though this will be seen as a long term positive for businesses, with the greater efficiency allowing companies to reduce the cost of transporting goods, it will ask challenging questions of our existing road network and transport infrastructure. In the coming years, it may be possible for a human driver to control a fleet of 10 vehicles from the lead HGV while interacting with “ordinary” cars. In this instance, if mechanical defect, human error or a technical problem such as a loss of signal were to occur, the chances of a very serious accident resulting are proportionately higher. Not only would the businesses responsible for these vehicles be very concerned about potential reputational damage but the insurers of any vehicle involved, or third parties such as vehicle manufacturers, could be liable for the substantial losses, which could discourage uptake.
"In the light of this, it is critically important that the government considers not just the viability of the technology but also the practical solutions for the potential issues that will be faced by all ordinary drivers interacting with driverless vehicles. For example, the advent of ‘safe harbour’ lanes, for the exclusive use of autonomous cars, would be one possible solution to minimise the risks of technological failure. Ideas like this are still in their infancy and it will be interesting to see how widely the government will invest resources into researching possible alternatives."