By Noor Zainab Hussain
(Reuters) - UK insurer Hastings Group Holdings Plc would benefit from a further rise in the rate of insurance premium tax (IPT) if Chancellor George Osborne were to announce one on Wednesday, pushing customers to shop around for prices.
The UK Budget announcement could see a tax hike on British motor and home insurance policies to 12.5 percent from the current level of 9.5 percent, according to roadside recovery firm AA Plc.
CEO Gary Hoffman told Reuters that such a rise would mean a doubling of the tax in a 12-month period and saw it as "a bit unfair on consumers" as most tax hikes are passed on to them.
A jump in IPT to 9.5 percent from 6 percent, was a surprise announcement in the July budget. The rise was effective November last year.
"It is a bit of a stealth tax in some ways because it is a compulsory purchase and people have no choice but to buy car insurance," Hoffman said, calling the speculated hike bad news for consumers.
Hoffman said Hastings will be a "net beneficiary" of a hike, with higher prices likely to encourage customers to shop around for their policies.
About 90 percent of the company's motor insurance sales are via price comparison websites, Hastings has said.
The company, which mainly operates in the UK motor market, offers private car insurance, home insurance, motor bike and van insurance and premium financing and ancillary products.
"...It is not something I like frankly, Hastings taking advantage, just because of our business model of taxes going up," Hoffman added.
An IPT rise to 12.5 percent would mean 37 pounds added to the average car insurance premium and over 80 pounds for young drivers, the AA said.
Hastings reported a 19 percent jump in full-year operating profit to 126.1 million pounds, driven by a rise in gross written premiums, and proposed a maiden dividend of 2.2 pence per share.
Analysts on average had expected full-year operating profit of 120.10 million pounds, according to Thomson Reuters I/B/E/S.
Shares in Hastings, which listed on the London Stock Exchange last year, were up 4.7 percent at 169.1 pence at 0929 GMT on Tuesday.