Insurers row back on decisions to shoulder 1pc levy
FOUR of Ireland's major life insurance players have backtracked on their summertime decisions to shoulder the 1pc life and pensions levy themselves and are now either collecting or preparing to collect the charge across a range of policies.
The news comes almost six months after the levy was introduced. At the time, the industry delayed passing the charge on to customers in the hopes that they could persuade the Department of Finance to review the charge.
Three chances to change the rules have come and gone, but industry body the Irish Insurance Federation (IIF) yesterday said it remained "hopeful" of getting some relief in next Thursday's Finance Bill.
Despite that hope, insurers have begun taking matters into their own hands by passing on the levy or announcing plans to do the same, unwilling to continue making quarterly payments to Revenue for a charge they're not recouping.
Several other insurers have also decided to begin charging the 1pc in the immediate aftermath of the Finance Bill, should changes not be forthcoming.
Market leader Irish Life last week told its policyholders that it would begin applying the 1pc levy to its savings plans from February 1 and to its new investments from March 1. The company says it will "defer" applying it on pensions until the Finance Act is published.
The revised policy marks a significant departure for Irish Life, which was first out of the traps to announce they wouldn't be charging the levy last summer.
The bancassurer has also insisted the multi-million euro cost of paying the government levy while not collecting it was "not material", a point disputed by several other insurers.
Fellow top-tier player Bank of Ireland Life/New Ireland also changed its policy and began to charge the levy on protection business "late last year", a spokeswoman said yesterday.
She added that the business "intends to start collecting" the levy on regular premium savings policies in March and will "review" lump sum savings and pensions policies "following publication of the Finance Bill".
Meanwhile, Friends First began collecting the levy on new protection and regular premium business on January 1 and will "begin collecting the levy in early 2010" for existing protection, single premium investment and single premium pension business from "early 2010".
Aviva (formerly Hibernian) has not yet implemented any changes but a spokesman yesterday confirmed the UK-quoted insurer was "preparing its systems to collect the levy on policies".
The levy is not expected to be actually charged until after next week's Finance Bill.
The only major insurer who has not outlined plans to revise its levy policies is the rapidly-growing Zurich Life.
A spokeswoman for the company yesterday said there were "no plans to change our current position". It is understood, however, that Zurich will review its policies in light of the Finance Bill.
Standard Life is also "continuing to absorb" the levy "until further notice" pending clarity from the Finance bill, while Canada Life is "reviewing" its position and expects to issue an update "early next week".