A rise in insurance premium tax (IPT) could deter potential customers from taking out policies, warned BIBA.
The BIBA warning followed industry concerns that the Treasury would increase tax on insurance policies in his pre-Budget report on Wednesday, revealed a report.
BIBA chief executive Eric Galbraith said: "This is something brokers have been concerned about. IPT is an extra cost on top of the insurance policy and any increase will impact everyone; the broker, the insurance industry and the customer."
IPT was first introduced in 1994 by the then Conservative Chancellor Ken Clark. The UK has the second lowest IPT level in Europe, currently a 5%.
Accountants and business advisors Mazars' tax partner Andrew Green said: "Gordon Brown sees the insurance industry as an easy target. The premium rises of the past two years have at last proven too attractive to ignore for the Chancellor, as he searches the business world for a solution to his `black hole'."
According to the report, Green estimated that a 1% increase in IPT could bring in an extra £300m each year.
He said brokers and underwriters had previously hoped that tax would go down or stay the same, particularly in the light of increase rates for public liability and EL policies.
Green said: "If an increase is announced, this will be a tough blow to take for an industry that has started to stabilise," concluded the report.
