Car insurance premiums are shooting skywards with a rise of 10.9 per cent up to the end of November.

Recent price reductions have been reversed following the move to increase Insurance Premium Tax (IPT) from six per cent to 9.5pc, according to research from the Consumer Intelligence Motor Insurance Index.

The over-50s are being hit hardest proportionately, with rises of 16.4pc sending the age group’s average premium up to £279. Similar rises have been seen across the board, but they make up a much lower proportion of larger premiums. The under-25s, for example, have seen a 1.5pc rise, taking their premiums to £1,680.

IPT was increased in the Government’s summer Budget and is estimated to raise nearly £1.5 billion and increase prices for motor, breakdown, home, buildings, pet, private medical and mobile phone insurance.

Ian Hughes, chief executive of Consumer Intelligence, said: “The rise in Insurance Premium Tax is having a massive immediate impact on pricing across the market and the annual increase of 10.9pc is substantial.

“Customers need to ensure they are receiving the best value for money from their insurer and many are likely to switch in response to premium rises which are generally nothing to do with insurers.

“The biggest concern is that prices are rising again for under-25s after years of cuts. They should start looking at ways of limiting rises, such as black box technology.”