Minister Larose meets association of insurers |22 August 2017

If the National Assembly thought the proposal to make it mandatory for all home owners to obtain home insurance was a path in the right direction for home safety, many Seychellois argue that it will only add an extra burden on their budget.

There is currently no legal requirement mandating that home owners should have a home insurance policy although many mortgage providers require it as part of their mortgage conditions.

Concerned with the rise in cost of living which discourages people to seek out insurance policies, the Minister for Finance, Trade and Economic Planning Peter Larose has met the Association of Insurers of Seychelles to discuss solutions to this problem.

The meeting was conducted last week at the ministry’s headquarters and was attended by representatives from H. Savy Insurance, Sacos Insurance, Falcon Insurance, Mauritius Union Seychelles and other stakeholders.

Unsurprisingly the main issue deliberated upon was the 15% Value Added Tax (VAT) currently imposed on all insurance policies, apart from marine cargo and life insurance policies.

The chairman of the Association of Insurers Lambert Woodcock stated that the 15% VAT is cause for concern because it helps create a surge in premium rates and prevents people from purchasing insurance policies.

The solution, according to them, is affordable insurance through reduction of VAT. This will also go a long way in diminishing public perception that insurance policies are expensive, they argued.

“The 15% tax which is applied on services and goods also applies to insurance making it expensive for our clients. In the region tax on insurance is reasonably low; in Mauritius for instance tax is around 1%. We want to consult with the minister to discuss how we can reduce taxes especially on essential insurance like home insurance,” Mr Woodcock elaborated.

Mr Woodcock also predicted that a decrease in premium rates will incite more people to procure insurance policies and in the end the companies will pay more tax to the government.

The chief executive of Sacos, John Esther, agreed that there should be more consideration for people who have valuable uninsured assets through cost-effective products which can be achieved if the relevant authorities consider a review of their tax regime.

In order to carry their message along Holly Bakke, a consultant from the Financial Services Authority (FSA), gave a presentation on the role of mandatory insurance in economic development and consumer protection.

On his part Minister Larose said his ministry is looking into ways to reduce the cost of living, emphasising that the private sector has an important role to play in creating a favourable environment for such a feat.

“The ministry will be taking the insurers’ request into consideration as we undertake preparation for the 2018 budget address,” Minister Larose said, adding that his ministry will have to assess how a reduction in tax insurance will benefit everyone involved.

Consultant Bakke has been requested to follow up on issues surrounding this topic while the association has until September 15 to send in an official proposal for tax review.