Households start the year with a rise in the price of the most common insurance, such as home, vehicle, death and civil liability, which can make their bills more expensive on average by almost 30 euros per year. The new General State Budgets propose an increase in the tax on insurance premiums (IPS) from 6% to 8% as of January 1, 2021, after more than 20 years without changes in taxation. The decision, as announced by the Executive at the time, will allow the State to collect some 455 million euros a year, 25% more than what it receives in this way, which will come out of the pocket of 95% of Spanish households, since in In our country, practically all families have some type of insurance.
The tax increase does not affect all types of insurance, since there are some that are exempt. Specifically, the premiums that will become more expensive are those for car, home, community of owners, death, legal defense and civil liability. Excluded from this tax increase are health care, illness, life, credit and surety insurance, reinsurance operations, operations related to pension plans, group insurance or mandatory social insurance used as an alternative to pension plans and funds, combined agricultural insurance and insurance operations related to the international transport of passengers or goods.
According to data provided by the National Institute of Statistics (INE), Spanish families pay an average of 586.62 euros per year for car insurance. With the increase in the tax on premiums from 6% to 8%, households will pay an average of 597.68 euros from January, which means 11 euros more per year. It should be noted that in Spain, 79% of families have insured cars and, according to data from the employers’ insurance company Unespa, there are a total of 32 million vehicles with insurance in our country, practically the national park since its coverage is mandatory.
The households that have a higher level of contracting this insurance are those of Castilla-La Mancha, Murcia and the Balearic Islands. Among the Autonomous Communities with lower penetration rates are Asturias and Aragón.
With regard to home insurance, families pay an average of 295.5 euros per year for it, which with the increase in the tax will make it more expensive by almost six euros per year, reaching 301 euros. This rise will also affect 72% of Spanish households, a percentage that has an insured home. Specifically, in our country there are 17 million homes with coverage. The families that insure their habitual residence the most are those of the Basque Country. This autonomous community is well above the average, with almost 90% of insured homes. The places where there is less tendency to protect the main residence through insurance are the Balearic and Canary Islands, as well as Ceuta and Melilla.
On the other hand, those companies and people who have civil liability insurance will also see the final price increase by around five euros more per year. The average that families pay for these insurances, always according to INE data that do not mention the cost of premiums for companies, is 261.2 euros per year, which from 2021 will become 266 euros per year.
Finally, another of the usual insurances most affected by the Government’s decision is that of death or burial, which in Spain has contracted 44% of Spanish families, with 21.9 million insured people. The average that households pay per year for this premium stands at 328.72 euros and, with the new law, the bill will rise to almost 335 euros, that is, 6.2 euros more than in 2020. In total , Spanish families that have these four types of insurance will see the price increased by up to almost 30 euros.
More risk exposure
The insurance sector, represented by Unespa, an employer with 200 associated insurers and reinsurers that account for approximately 98% of the insurance business volume in the Spanish market, disapproves of the increase in insurance premium tax. “The increase in insurance taxation can lead to a decrease in the protections that families and companies contract and, consequently, in a greater exposure to risk on the part of society as a whole and the country’s economy,” denounces the organization, which, furthermore, calls the measure “disproportionate” and “lack of justification”.
Likewise, the association warns that it must also be taken into account that the insurance premium tax is “regressive” from a social point of view, since it harms people and companies that, through insurance and with a liability criteria, insure your daily life, your assets and your business and professional activities against possible damages that may cause third parties.
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