The Bahamian insurance industry is currently debating a request by the government not to pass on a 1% tax increase on quarterly gross premiums to customers in the form of higher premiums.
The quarterly tax is to rise from 2% to 3%. In response to the government’s plea, chairman of Royal Sun Alliance, Franklyn Wilson, recently announced in a radio interview that: “We will study very hard the request of the Government and whether that is possible or not, is too early to tell, but it is a very tough situation.”
According to the Nassau Guardian, financial experts believe that in the property and casualty categories of insurance, tax is refunded by the insurance company and that therefore there will be no need to pass on any extra costs resulting from the tax increase. According to the unnamed experts, the same is not true in the life and health insurance sectors, where the extra costs may well be passed on to customers.
However, it has also been observed that the general trend in the cost of premiums in recent times is down, and some observers have suggested that the rate is falling sufficiently fast to absorb any extra cost passed onto clients by the one percentage point tax increase.
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By Amanda Banks, Tax-News.com
