British insurers have criticised a 58% increase in insurance premium tax, announced in Chancellor George Osborne’s emergency budget.

The tax, which applies to general insurance products for individuals and businesses, will increase from 6% to 9.5%, raising an additional £1.5 billion ($3.11 billion) a year.

British Insurance Brokers’ Association CEO Steve White says the “stealth tax” will hit millions of people as premiums inevitably rise.

“The Government has been working with the industry to reduce the cost of insurance for consumers, including a summit chaired by the Prime Minister,” he said.

“It therefore seems counterintuitive to be taking measures that will add to the cost – effectively taxing protection.

“We hope the Government will review this rise and correct it in further budgets.”

The Association of British Insurers says the rise will add £9.48 ($19.67) to the average annual household building and contents policy and £12.25 ($25.41) to the average annual comprehensive motor policy.

“Insurance premium tax is a tax on people and businesses at the point at which they buy a general insurance product,” Director-General Huw Evans.

“So it’s very disappointing to see a more than 50% tax increase being imposed on consumers, especially when the insurance industry and the Government have worked so hard in recent years to bring down the cost of essential insurance.”

Mr Osborne says the tax remains well below rates in other countries.

The emergency budget was held following the Conservative Party’s election victory in May.

A budget had been announced as usual in March, but this was produced by the previous coalition government, which included the Liberal Democrats.