by Rob Hosking
The insurance law changes are aimed at bringing the tax treatment of life insurance up-to-date with industry practice. At present the tax laws reflect the old-fashioned life policies which contained a significant savings element.
The changes mean most life insurers will pay more tax and are likely to pass increased cost on in premium rises.
Premium hikes of 20% or more have been suggested as possible.
As the bill is currently drafted the changes are to take place from 1 April and the Insurance Savings and Investment Association has called for this to be put back.
Chief executive Vance Arkinstall says the industry would struggle to introduce any necessary changes in time – especially as the final shape of the legislation may change during the select committee process.
Minister for Revenue Peter Dunne says he has an open mind on implementation timing.
“It is most unlikely the bill will be enacted by April,” Dunne says.
“In most cases that’s not going to be a big problem but there may be some instances where a change is forced upon us by that.”
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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