Asteron takes different approach to GST increase
Asteron is taking a different approach than other companies to today's GST increase, paying for the increase for all clients in October and the first two weeks of November.
Friday, October 1st 2010, 1:09PM
by Jenha White
The GST component of premiums for all non-life benefits (including Trauma, TPD and Income Protection) increases from 12.5% to 15% from today. GST does not apply to life insurance.
Asteron says from 15 November 2010, non-term life insurance premiums subject to GST will increase by 2.2% for new and existing premiums.
The increase will be applied automatically and Asteron will be writing to clients with non-term life insurance progressively from 15 October to let them know.
Asteron and AMP will also include the GST increase on adviser commission payments from today for advisers with GST registered businesses.
Sovereign, AMP, AXA, ING Life, TOWER, Fidelity Life and AIA are all having the GST component of premiums increase from 12.5% to 15% for all non-life benefits issued on or after today.
As for existing business, Sovereign, Fidelity Life, AXA, TOWER, AIA and ING will add the GST increase on the anniversary of a customer's policy.
Sovereign says this requires bearing the cost of pre-payment of GST on those policies.
"For most clients this will mean the increased GST will be incorporated into their premium from their next anniversary date, and therefore premiums will not increase to reflect the increased GST rate until then."
It says clients will then receive their usual anniversary/review letter. It says for some existing policies, premium pricing is set on a GST exclusive basis and premiums for these policies will increase on 1 October 2010 to reflect the increased GST.
Sovereign says those clients who are to receive the GST increase outside their anniversary date will receive an individualised communication notifying them of the change to their premium.
ING has elected that for existing business of five and ten year Guaranteed Premium Policies where their next rate renewal date is on or after 1 October 2011, that the time of supply for the remaining premiums is deemed to be 30 September 2010 until the next review date or the 30 September 2011 if the next review date is after 30 September 2011.
A GST letter will be sent to these policyholders six weeks before that date, informing them of the GST increase.
ING Life will make the payment in its GST return for September 2010. This means the premiums will not change and GST will continue to be applied at the 12.5% rate to the remaining premiums on these existing policies, until their next review date or the 30 September 2011 if the next review date is after 30 September 2011.
GST registered policyholders can claim GST at 12.5% until such time as the policy moves on to the 15% GST rate.
ING Life says for all other policies, when they go through a rate renewal, the anniversary letter will stipulate the following:
"On 1 October 2010, GST increased from 12.5% to 15%. GST applies to the premium for all non-life benefits. The new premium shown for these benefits has taken account of the increase in the GST rate from 1 October. GST does not apply to premiums for Life Cover and Life Income Cover."
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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