The latest Insurance Price Index from the British Insurance Brokers’ Association (BIBA) and Acturis that tracks £5bn of actual premiums paid annually via insurance brokers showed a significant rise in the level of premiums charged for very small enterprise policies.

Quarterly price index reveals pressure on very small businesses as premium increases coupled with rise in Insurance Premium Tax see insurance costs up by almost 7%

“Very small businesses often have limited funds at their disposal and as the rate of Insurance Premium Tax (IPT) increases 58% to 9.5% from 1 November 2015, combined with the general increase in premiums, small firms will be paying a massive 7% more for their business insurance than they were this time last year,” commented Graeme Trudgill, BIBA’s executive director.

Conversely, if those same small businesses have a van or other commercial vehicle then they will benefit from premium reductions for their motor insurance.

Theo Duchen, Co-CEO of the Acturis Group added: “Acturis and BIBA have developed indices that represent the key insurance buying segments and well as individual classes of business. During the course of 2015 our “Small SME” index which includes a typical package policy and a commercial vehicle policy has reduced each quarter this year. However, the reduction is smaller in quarter three and coupled with the rise in SME package policies sees premium pressure on very small businesses.”

Steve White, CEO at BIBA concluded: “We called on government to reconsider the increase in IPT as insurance has always been considered more of a social good than a taxable service. The IPT rate has now increased 280% since it was first introduced in 1994. The insurance market remains very competitive and we do not expect insurers to absorb the coming increase in IPT which will have an effect on individuals and businesses throughout the UK.”

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