An insurance premium tax increase, introduced this month, could add about 20% to average annual household bills, the Association of British Insurers (ABI) warns.

“This latest hike must be the last,” ABI Director of General Insurance Policy James Dalton said. “The next government must freeze this tax to give hard-working households and businesses a break.”

The ABI says the increase comes at the “worst possible time”, because average premiums are already rising due to changes in the way personal injury compensation is calculated, rising repair bills and a resurgence in whiplash-style claims.

The increase to 12%, effective from last Thursday, comes eight months after a rise to 10% and marks a doubling in less than two years. The tax is payable on individual policies including home, motor, pet and private medical cover, plus commercial policies.

The ABI says those paying higher premiums, including young drivers and people with private medical cover, will be hardest hit.

A family with combined home insurance, two cars, including one young driver, and two dogs could now pay a total annual insurance premium tax of £283 ($488), up £47 ($81) from previous levels, according to the group’s calculations.

The 12% rate could also add £300 ($517) to commercial premiums, it says.

British Insurance Brokers’ Association CEO Steve White says the Conservative Government has indicated more increases are possible. The UK votes in a general election on Thursday.

“Let’s be clear about this – it is a tax on protection and penalises those that take the burden off the state by showing responsibility and prudence,” he said.

“We feel this rise is counterproductive to what the Government should be doing and we are calling for a freeze of the tax for the term of the next Parliament.”

Charity, business and finance groups have opposed the latest increase to the levy, which the Institute of Fiscal Studies says has become “too high”.

Between 1997 and 2015 there were only two increases, taking the rate from 4% to 6%.