The Association of British Insurers (ABI) has urged the Chancellor of the Exchequer to spare increases to insurance premium tax (IPT) in this month’s Budget.
Relaunching its #IPTsUnfair campaign today (9 October), the trade body has called for "responsible insurance customers" to not be penalised by another tax rise.
IPT is a charge on general insurance premiums, including private medical and business, and the ABI has said the UK has the sixth highest rate in Europe.
The tax was increased on three occasions between November 2015 and June 2017 - doubling from 6 per cent to 12 per cent.
The ABI campaign includes a television advert featuring celebrity lookalikes receiving penalties for acts such as locking their vehicle and installing house alarms.
An ABI spokesperson said the campaign demonstrates the "absurdity of punishing people who are doing the right thing".
Huw Evans, director general of the ABI, said: "The Chancellor has a difficult task ahead of him this Budget but he should realise a raid on the responsible is the wrong way to balance the books.
"People buy insurance because it is a legal requirement or because they are wisely protecting their homes, businesses, families and health. Punishing these people with another tax rise would be inexcusable."
The trade body said calculations from the Centre for Economic and Business Research showed 200,000 people had moved away from health insurance towards NHS care because of recent IPT rises.
Mr Evans said the current need to fund the NHS made it counterproductive to make health insurance more expensive, forcing more people to rely on overstretched resources.
Mike Cherry, national chairman at the Federation of Small Businesses, said IPT deterred small firms from making the right choices.
He said: "It is hard for us to persuade small businesses to take on the different kinds of protection they need when they are constantly being hit with increases to this stealth tax."
Mr Cherry said small businesses were thinking twice about purchasing the right cover because of the "ridiculous" IPT.
He said: "Enough is enough. IPT has already soared from 6 per cent to 12 per cent over the past three years. If the Government wants to encourage responsible behaviour among small firms, it should rule out any further hikes to this ludicrous levy."
Roy McLoughlin, associate director at Cavendish Ware, said the government should take care not to deter consumers from taking out insurance.
He said: "Hiking IPT means private medical insurance is stagnant and arguably contracting at a time there has never been so many pressures on the NHS.
"This is counterproductive for those who can afford it. Lots of people are giving up private insurance and moving back towards NHS and ultimately increasing the pressure there."