Comprehensive motor policy losing market due to 21% VAT on non-life insurance

This is in spite of the fact that its implementation has been put on hold, some industry players have told the Graphic Business.

Comprehensive motor policy losing market due to 21% VAT on non-life insurance
Comprehensive motor policy losing market share due to 21% VAT on non-life insurance

A 21% VAT was imposed on non-life insurance plans as part of the raft of new taxes planned in the 2024 budget to support the government’s tax collections to match the sub-regional average, although this appears to be having a negative impact on the sector.

The players, who requested anonymity, stated they were starting to observe a trend in which car owners who had comprehensive motor insurance coverage in the past were now choosing third parties. They did not, however, immediately provide numbers.

They issued a warning, saying that the policy would severely hurt their motor insurance company, which accounts for around 60% of their total revenue, unless it was permanently discontinued.

“The non-life insurance sector, which makes up around 60% of our company, will suffer greatly if we proceed with imposing VAT on this type of insurance.

People can decide not to get any auto insurance at all as one of the consequences. However, we are now seeing a shift in focus from overall policy to third parties, which will directly affect the industry, according to one source.

He said that customers had begun approaching them to transfer their comprehensive auto insurance plans to third parties simply by virtue of the policy’s announcement.

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