A committee co-chaired by the chancellor of the exchequer believes a stable, predictable and competitive tax system will be important for the medium and long term health of the insurance industry in the UK.
A report from the insurance industry working group, which comprised nine senior executives from companies such as Aviva, RSA, Legal and General and Prudential, said the government also needed to ensure that business was not lost to low tax or offshore domiciles. It pointed out that insurance companies such as Hiscox, Brit Insurance and Zurich had moved their headquarters outside the UK in recent years for tax reasons.
The industry professionals said the design and operation of a tax system was a key factor when companies decided where to invest or locate their headquarters. Regular tax changes undermine the competitive position of individual products and a jurisdiction that was unattractive to invest in increases costs and uncertainty.
The group's recommendation on tax added that the authorities should improve their consultation processes so that any changes to the tax code were based on the best available information and did not have any unintended effects.
The executives said recent foreign profits legislation had improved the competitiveness of the UK tax system and that the three-year consultation on the taxation of life products was a good example of the government and the industry working together.
The report, Vision for the insurance industry in 2020, made 12 recommendations about how the industry in the UK could be the world leader by the end of the decade.
