Insurance premium tax (IPT) is to rise to 9.5% by November, the chancellor has confirmed in the Summer Budget.
The IPT rate was previously 6%,
Chancellor George Osborne said: "Britain's insurance premium tax is well below tax rates in many other countries.
"With these measures I am putting in place an approach for taxing banks and insurers over this Parliament which is sustainable, stable and fair."
Huw Evans, director of the ABI said: "Insurance Premium Tax is a tax on people and businesses at the point at which they buy a general insurance product.
"So it's very disappointing to see a more than 50% tax increase being imposed on consumers, especially when the insurance industry and government has worked so hard in recent years to bring down the cost of essential insurance."
Steve White, chief executive of the British Insurance Brokers' Association said: "We are extremely disappointed in this rise in insurance premium tax and will mean insurance will become more expensive for the public as a result.
"The Government has been working with the industry to reduce the cost of insurance for consumers - including a summit chaired by the Prime Minister. It therefore seems counterintuitive to be taking measures which will add to the cost - effectively taxing protection.
"We hope the Government will review this rise and correct it in further budgets."
Private medical insurance is one of the areas of insurance that will be affected by the IPT rise, while protection insurance is unaffected.
Neil McCarthy, director, Direct Life said: "Following the Chancellor's announcement in the Budget today that Insurance Premium Tax will increase, Direct Life welcomes that life insurance and permanent health insurance continue to be exempt from this tax."
