ABI director general Mary Francis is warning against further rises in Insurance Premium Tax (IPT) after figures showed British households are spending less on general insurance than they were seven years ago.

Francis is urging the Chancellor of the Exchequer, Gordon Brown, to consider the impact the insurance tax has on the poor when he presents his Budget on March 21.

ABI research shows that expenditure on general insurance grew at a slower rate than household income after 1993, falling from

2.7 to 2.4% of income by 1998.

But these figures do not show the dramatic fall in expenditure on motor and buildings and contents cover which has been masked by rises in other classes of general insurance, such as medical insurance and mortgage

payment protection cover.

It partly reflects the intensity of the

competition in the general insurance market during these years which has driven premium prices down.

But there has also been a drop in the number of households actually buying motor and buildings and contents covers.

Francis argues that another hike in IPT

will result in more poorer households

forgoing insurance.

"One of the key factors affecting

householders' decisions on whether - and how much - they should be spending on general

insurance is, of course, their wealth and income," Francis said.

"Although, overall, spending on general insurance seems to be falling as a percentage of income, it still remains much higher for those on lower incomes.

"And that is one of the key arguments against any further increase in IPT at the

next Budget."

The percentage of households with

buildings insurance fell from 64-61% from 1993 to 1997/8. While the percentage with contents fell from 75-73%.