Private medical insurance experts have described the rise in IPT as ‘counter-productive' to the take-up of corporate and individual policies.
Brian Walters, principal of intemediary Regency Health said: "IPT has increased by 66% in the past year, which will be counter-productive where PMI is concerned because it will price people out of the market and place more of a burden on the NHS.
"The subscriber base for private medical insurance has been steadily eroding over the past few years due to spiralling costs, and the IPT increases will only exacerbate the problem.
"The government urgently needs to look at exempting medical insurance from IPT - as is the case in several European countries - to alleviate pressure on the NHS.
"The government's own website erroneously describes Insurance Premium Tax as ‘a tax on insurers' when it is, of course, a tax on consumers and businesses."
Meanwhile, Aviva discussed the impact of IPT funding and its use for the UK economy.
Mark Noble, managing director of Aviva UK Health said: "We expected to see some rise in Insurance Premium Tax in this Budget but we are pleased to see that this money will be used to improve flood defences.
"This news will be welcomed by many people who remain concerned and at risk of flooding."
Other insurers using the announcement as the opportunity to talk about alternative funding for healthcare or means of cost containment.
Charlie MacEwan, corporate communications director at WPA said: "For me, it is key that insurers communicate the value of medical insurance and all that they can do to keep premiums down and, in effect, reducing the impact of any rise in IPT."
He said that WPA customers had several options including omitting less relevant benefits in plans e.g. asking whether cancer cover is needed if local care if good.
He added: "For corporate healthcare, currently, for every £1 a company spends on healthcare (claims fund, administration and insurance charge) there is an additional 25p that they have to spend on taxation (IPT and employer's NIC).
"Employers are the back bone of the economy and an IPT increase is another incremental rise that is only going in one direction. For me, the smart employers are planning ahead.
"The reason companies buy healthcare is to increase efficiency giving employees control of how they recover from illness. You know this but the health of an employee affects productivity."
He mentioned corporate healthcare trusts and WPA's corporate deductible as other avenues for customers to consider.
Wellbeing and healthcare trusts
Meanwhile, in a statement AXA PPP said: "The Chancellor's decision to raise the level of IPT to 10% does nothing to encourage employers to do more to invest in the health and wellbeing of their workforce."
The insurer said that health trusts could be an alternative for employers looking to provide health benefits for staff.
AXA PPP added: "Health trusts need not be intimidating to employers. They are relatively straightforward to establish and we welcome the opportunity to work with all employers and their advisers in this area for more sustainable medical benefit provision.
"The increase in IPT gives intermediaries a good opportunity to demonstrate their value to clients. Actively advising on Health Trusts should help them to ensure the health benefits they recommend meet their clients' needs as cost effectively as possible.
"The increase in IPT is also unwelcome for individuals and, again, we will continue to work closely with them and their advisers to try to protect their health and wellbeing."
Further reading
Budget 2016: ‘Disappointing news' - first thoughts as insurers react to IPT rise
