Insurance Ireland calls for improved social and environmental sustainability in its Pre-Budget Submission
10th July 2023. Insurance Ireland has submitted its Pre-Budget Submission for 2024. Insurance Ireland is proposing the prioritisation of seven key policy measures including:
1. A Transparent and Sustainable Pensions Environment – further consideration to the utilisation of the experience and the expertise of the existing pension infrastructure and providers currently operating successfully in the Irish market
2. Sustainable Finance – deliver sustainable objectives for society and lead the development of targeted policy and concrete measures to close the sustainability investment gap
3. Irish Motor Insurance Database – ensure operational readiness and resourcing to utilise the new system to verify insurance status and detect non-compliant drivers
4. OECD International Taxation Consultation – Ensure some of the unique aspects of the tax and accounting regimes for insurance companies are considered in the Model Rules and Administrative Guidance
5. Equalising the taxation treatment of financial products – Equalise the Life Exist Assurance Tax rate with that of Capital Gains Tax and Deposit Interest Retention Tax
6. Cross Border Taxation – Consider standard de minimis rules across countries where employees could work in another country without giving rise to a tax obligation
7. Benefit in Kind on Corporate Paid Dental Insurance Benefits – Expand dental coverage for Irish workers and their families by eliminating the BIK tax on corporate paid dental insurance benefits
Commenting on its submission, Insurance Ireland CEO, Moyagh Murdock said, “The seven policy measures complement the Government’s overall strategy for a transition to a sustainableeconomy. Adjustments are necessary to ensure that Irish citizens can fully embrace these efforts. Environmental sustainability must be accompanied by a clear strategy for social sustainability. A future-oriented pension environment to avoid old-age poverty and a comprehensive strategy on attracting talent must complement the Government strategy.”
With a particular focus on the ask for a transparent and sustainable pensions environment, Insurance Ireland sees it as a missed opportunity not to give further consideration of the utilisation of the experience and expertise of the existing pension infrastructure. Pension providers have been operating successfully in the Irish market and providing value for money and financial security employees for decades. Utilisation of their proven expertise should be included in the recommendations of the Committee’s Report on Pre-Legislative Scrutiny of the General Scheme of the Automatic Enrolment Retirement Savings System Bill 2022.Moyagh Murdock commented “We believe this approach would lead to a speedier and lower cost implementation of the system and could work to achieve the maximum of 0.5% charge outlined in the recommendations. We are therefore calling on Government to consider this approach further”.
Ireland’s industry and services sectors face an outstanding pressure to find and attract new talent, particularly in the high-skilled sectors. Insurance Ireland suggests that policies should be assessed against political or regulatory obstacles to attracting additional talent into our market.
Where taxation policies and existing taxation agreements are not fit for new ways of working and should be reviewed.
Insurance Ireland also calls on Government to ensure An Garda Síochána has the resources needed to ensure it is operationally ready and resourced to utilise the new Irish Motor Insurance Database system to verify insurance status and detect non-compliant drivers. Moyagh Murdock commented “It is a cause of great concern that the level of uninsured driving in Ireland is disproportionately high compared to our European Union and United Kingdom counterparts. It is currently running in excess of 8% of drivers. We know from international experience that the most effective way to reduce this number is through the use of technology to detect illegal and irresponsible drivers at the roadside. This cohort of drivers are penalising responsible drivers through higher premiums. We are very supportive of the increased use of modern technology such as the Garda Mobility project and we urge the Government to ensure An Garda Siochana is effectively resourced to ensure the insurance information being provided through the Irish Motor Insurance Database can be used effectively in the enforcement of Road Traffic enforcement and bring to justice those who flaunt the road traffic laws.”
Among the tax policy measures proposed is the expansion of dental coverage for Irish workers and their families by eliminating the Benefit In Kind tax on corporate paid dental insurance benefits. As an additional tax policy measure, Insurance Ireland further believes the Life Assurance Exit Tax (LAET) rate should be equalised with Capital Gains Tax and Deposit Interest Retention Tax. Moyagh Murdock commented, “The current tax regime discourages Irish people from saving in products subject to LAET by imposing a disadvantageous tax rate in comparison with deposits and other savings vehicles. Coupled with the 1% levy that applies to investments via life companies, it is our belief this represents an unwelcome market distortion, encouraging individuals to leave money sitting on short-term deposits”.