This year's budget did little for insurance
Looking back at my piece on last year’s Budget, there is a temptation to just repeat everything in it or, indeed, to run the entire piece again in the hope that nobody spots it as, like last year, the Chancellor of the Exchequer’s (“Hello, darling…”) book-balancing act has once again managed to circumvent the insurance industry.
What is interesting is that if you looked at the Government in terms of being a person, it seems that it is going to do what the majority of people have been doing for the last decade, in deciding to completely live beyond its means by having public borrowing increase to £175bn this year, followed by £173bn, £140bn, £118bn and £97bn in the following years. And government debt is set to rise to 79% of GDP by 2013. These are all pretty horrific figures but if the public has not been taking out protection as it should have been, then what does it mean if, for some reason, this country’s economy juddered to a halt?
By the way, those figures are just the Government estimates and several economists have been in the media referring to them as ludicrously optimistic.
At least the Government has some form of protection though because when times are tough, it can always just raise taxes some more. Or it could work on cutting public spending. But it probably won’t, otherwise Darling would have mentioned it in the House of Commons.
What they did do, is raise the rate of tax on high-earners from 45% to 50%. Realistically, this is not going to affect the majority of the population, with the Office of National Statistics giving figures indicating that the median wage across the country is a little under £25k per year. That development in the Budget was really just a political scoring point as it gave David Cameron and his ilk something to a) protest against; and b) to then turn around and say that they had no plans to rescind it if/when they come back into power.
So what then for the protection and health insurance industry? Well, the only real development could be in how you sell protection to your clients. Instead of asking them whether they can afford to give up two pints of lager or a packet of cigarettes each week in order to afford a policy, you are probably going to have to take into mind the added tax increases on those two products and downgrade your question to one pint of lager each week and a packet of cigarettes each fortnight.
