ATOL is funded by travel businesses, which are required to pay a fee of £2.50 for each traveller. This is held in a fund managed by the Air Travel Trust which is used to refund, repatriate or reimburse travellers for the cost of repaying for the affected parts of their trip.
This charge is not a tax on individuals or an insurance premium - the law requires travel businesses to pay it, not consumers. However, some travel companies choose to highlight the ATOL scheme cost by showing it separately on receipts and invoices.