Tax advantage for legal aid insurance swallowed up by insurance rate hike

Tax advantage for legal aid insurance swallowed up by insurance rate hike
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Insurance companies have come in for criticism after it was revealed that at least two companies have taken steps to lay hands on a tax advantage intended by the government to make legal assistance more available to the general public.

The matter concerns a tax break worth 124 euros passed by justice minister Koen Geens and intended to be used by members of the public who require legal assistance in various matters such as divorce, employment rights and accommodation matters. The sum is intended to pay the supplement charged by insurance companies for legal coverage, which does not form part of the standard package of insurance required by law. The new rule comes into force in September.

However it has been revealed that one company, DAS, has increased the cost of its legal assistance insurance by 120 euros, swallowing up the tax break and making legal insurance no more available to the public than it was before. Another company, Arces, part of the P&V group, has also increased its prices by a more modest 75 euros.

It is unfair and incorrect to think that we are putting that tax break in our own pockets,” commented Erika Van Dyck, CEO of DAS, in De Standaard. “We have warned the minister that policies would become more expensive. The law provides for a list of guarantees which must form part of any tax-deductible legal assistance policy.”

Geens himself has responded that it is too early to reach any conclusion on the question, and in any case he does not have the authority to intervene in matters of the pricing of insurance policies. “If the consumer is faced with a unilateral premium increase, they can always cancel their policy and look for a new policy with another insurer,” he told the VRT.

Vincent Van Quickenborne of Open VLD described the process as “a perverse effect”.

A tax break is on the way, but in the end the consumer will pay the same, because the premiums are going up,” he said. “The taxpayer has to foot the bill, while the insurance companies, who apparently did a good job of lobbying the minister, make a fortune as a result.”

Alan Hope

The Brussels Times

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