Why tax relief at source for private health insurance should be increased

Insurance Ireland, the representative body for insurance providers in Ireland, has called for new measures to strengthen Ireland’s economic resilience and growth in its Pre-Budget 2027 submission. Among the key measures Insurance Ireland proposes are increasing the cap on tax relief at source for private health insurance, equalising tax treatment of financial products with similar objectives, and establishing a level playing field in the Government’s proposed Personal Investment Account (PIA) to ensure all market participants including insurers can be involved in enhancing long-term consumer saving.

Increasing tax relief at source can help more people

The Insurance Ireland Pre-Budget 2027 submission says private health insurance is among the most valued products in the Irish market, with over 2.4 million policyholders reliant on its cover. Tax Relief at Source is important with regard to affordability and sustainability of the market, however its effectiveness has diminished over time. Insurance Ireland recommends a phased increase in the cap from €1,000 to €1,500 per adult in Budget 2027, which will support affordability, ensure continued market participation and support policyholders manage the impact of rising premiums.

Insurance Ireland believes the Government’s proposed PIA is a welcome advancement and one that Insurance Ireland has actively campaigned for. While we appreciate work is ongoing regarding its structure, ensuring it is simple, accessible and tax-efficient will be imperative to its success. The insurance sector is uniquely positioned to support the delivery of the PIA and strongly recommends that Government ensures an adequate framework to encourage consumer participation and guarantees a level playing field where all market participants including insurers can be involved.

In light of the PIA, Insurance Ireland is also calling for Government to review regulation and taxation of life assurance and investment products and equalise the tax treatment for financial products with similar objectives. By equalising taxes such as the Life Assurance Exit Tax (LAET), Capital Gains Tax (CGT) and Deposit Interest Retention Tax (DIRT), as well as repealing the 1% Life Assurance Levy and the eight-year deemed disposal rule, Government can achieve its stated aim of stimulating long-term savings and investments while also encouraging consumer participation in retail markets.

Moyagh Murdock, Chief Executive, Insurance Ireland, said: “2026 marks a milestone for Insurance Ireland as we celebrate 40 years since the foundation of our federation. At that time, Ireland’s insurance industry comprised just 18 member firms, serving a small, open economy that was navigating profound economic and social change. Today, Ireland is the fourth largest insurance hub in the European Union and is one of the most important reinsurance centres, employing over 43,000 people.

It is important that Ireland’s policies create the conditions for continued success in driving a competitive insurance market and continuing to build our international insurance base. Changing geopolitical dynamics and global uncertainty have underpinned much of this year, which has seen a shift to maintaining resilience, stability and ensuring opportunities for growth remain intact.

Ireland’s insurance industry remains resilient. It contributes approximately €3 billion annually to the Exchequer, manages over €300 billion in policyholder assets and paid approximately €74 billion in claims in 2024, supporting households, business and communities at moments of vulnerability. The industry is key in ensuring consumers can be protected while also developing their financial security and future wealth.

Insurance Ireland’s Pre-Budget 2027 submission is grounded in this experience and ambition. It provides recommendations to address the demands ahead while pointing to opportunities to further growth and wealth creation for Irish consumers.”

Insurance Ireland’s Pre Budget 2027 submission – Key Points

Life and Pensions Reform:

Introduce an Irish Personal Investment Account with insurers as recognised providers

Increase retail investor participation and mobilise household savings into productive investment through a simple, accessible and tax-efficient Irish Personal Investment Account.

Equalise the taxation treatment of financial products with similar objectives – Stimulate long-term savings and investments and encourage participation in retail markets by equalising Life Assurance Exit Tax, Capital Gains Tax and Deposit Interest Retention Tax and removing penalising 1% Life Assurance Levy.

Recognise the Role of Occupational and Personal Pensions in Supporting Adequate and Sustainable Retirement Outcomes – Complement Auto-Enrolment with targeted policy measures designed to address structural inequalities.

Pragmatic Implementation of the Insurance (Disregard of Certain Medical History and Miscellaneous Provisions) Bill and Access to Mortgage Protection Insurance – Work with life insurers to develop a more structured and systematic approach to the use of waiver provisions that will support consumers progress mortgage applications.

Implement recommended changes to Standard Fund Threshold – Make necessary changes to SFT regime as recommended in Dr de Buitléir report.

General Insurance Reform:

Support the industry proposal for a Flood Adaptation Scheme and a Sustainable Flood Insurance Fund – Support property owners implement preventative measures tailored to their individual circumstances, reducing overall flood risk and enhancing insurability.
Reform frequency and process for reviewing personal injury claims award guidelines – Establish a clear, transparent and rules-based process for the periodic review of award levels and embed regular benchmarking against UK and European jurisdictions to ensure Ireland does not diverge from international norms.

Introduce meaningful control over legal costs – Improve affordability to maintain discipline in damages and award levels and address the persistent challenge of high legal costs in litigated personal injury claims.

Health Insurance Reform:

Increase the Cap on Tax Relief at Source for Private Health Insurance – Implement a phased increase in the TRS cap to €1,500 per adult in Budget 2027 to help restore the value of the relief, ensure a greater proportion of premiums benefit from tax support and reinforce the role of TRS.
Enhance Young Adult Participation in Private Health Insurance – Create targeted policy measures to improve affordability, encourage continuity of cover and contribute to the long-term stability of the market.

Support Corporate Private Health Insurance as a Driver of FDI Competitiveness – Maintain a competitive and sustainable corporate PHI offering for businesses and Ireland’s broader economic strategy and FDI competitiveness.

Remove Benefit in Kind for Dental Plans – Expand dental coverage for Irish workers and their families by eliminating the Benefit-in-kind (BIK) tax on corporate-paid dental insurance benefits.

International (Re)insurance and EU Policy Reform:

Build a one-stop-shop inward-investment proposition by leveraging Ireland’s EU and Trade Platform – Develop a coordinated “one-stop-shop” inward investment proposition to ensure

Ireland remains a destination of choice for global insurers.

Progress regulatory simplification and reduction of administrative burden – Identify ways to proportionally simplify and consolidate legislation, without inhibiting competitiveness or innovation, exploiting benefits of scale offered by Single Market.

Adjust the European Commission’s proposal on securitisation to allow the participation of the Irish (re)insurance market – Further refine and engage at EU level to amend internal model and minimum size requirements in Commission proposal.

Participation Exemption for Branches – Introduce participation exemption for branches allowing reduction in complexity, administrative burden and cost of doing business, and continues to build on Ireland’s attractiveness as an international insurance hub.

Cross Sectoral Reform

Reform of Benefit-in-Kind Treatment for Professional Subscriptions – Support the maintenance of a highly skilled, competent and professional workforce within Ireland’s (re)insurance sector to enable continued competitiveness.

Develop Talent, Skills and Financial Literacy to Support Sector Competitiveness – Recognise talent, skills development and financial literacy as strategic enablers of insurance reform, competitiveness and resilience.

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