The ABI has attacked government plans for a levy on household policies to compensate the victims of crime.
Several weekend newspaper reports had suggested the government is planning to impose a £3 levy on household insurance policies.
The proceeds would then be used to raise funds for victims of crime.
However the ABI said a levy on household insurance would be costly and inefficient.
John Parker, head of general insurance at the ABI said: "The government should consider seriously the effects of such a levy on people who are struggling to pay their household bills. More than one in five households still don't have contents insurance and putting up the cost is the last think the Government should be doing.
"The competitive market for insurance has kept premiums down in recent years; this is not a good time for the government to be putting them up, particularly as Insurance Premium Tax is already delivering over £2bn for the Treasury.
"The imposition of this sort of levy would be a very costly and inefficient means of raising additional money for the government. It is wrong to treat household insurance as a source of extra tax."
