Endsleigh, the last large player in the Irish market insuring student possessions, has withdrawn from the State.

The British insurer cited "recent changes in insurance compliance legislation" for its decision to walk away from the Irish market. Endsleigh had run its business in the Republic, serving the 130,000 third-level students in the State, from its Belfast base. It said changes in the law meant that was no longer an option.

An Endsleigh spokesman said it was disappointed to have to end its Irish presence.

The Union of Students of Ireland (USI) said the decision was a blow. "A lot of insurance companies simply will not quote cover for possessions in shared accommodation," said USI president Mr Colm Jordan. "It is a really big worry for students and also for their parents."

While Endsleigh has said it will continue to honour existing policies, these will not be renewed when they expire. That means students entering or returning to third-level education this autumn face a struggle to insure goods such as laptop computers, bikes, credit cards and other valuables.

The departure of Endsleigh will also affect other people in shared accommodation. Insurers are reluctant to provide cover for people who do not own their own homes. They argue that claims experience shows the risk of theft in such circumstances is so high it ceases to be a viable business.

Tenants in shared accommodation are not covered for personal goods under any policy held by their landlords. They are also normally excluded from claiming under all risks clauses of policies covering the family home.

The news, communicated to Irish customers by letter, has taken the industry by surprise and brokers were this weekend examining options to provide alternative cover. Endsleigh said new regulations meant it would no longer be able to operate in the Republic without having a base here.

But a spokesman for the Irish Financial Services Regulatory Authority (IFSRA), which has recently assumed control for regulation for the insurance sector from the Department of Enterprise, Trade and Employment, said there had been no change in insurance compliance regulations or legislation recently.

IFSRA said any insurer would be allowed to operate across borders as long as they were authorised in their home jurisdiction and that authorisation had been notified to the regulator in those states where it wished to operate, in this case the Department and the IFSRA.

Endsleigh has had a particular link with the student market since its foundation in 1965 as an offshoot of the British National Union of Students.

Brokers contacted yesterday said there was no provider offering similar cover in the Irish market.

Burke Insurances, a Galway-based broker that used to offer cover for people in shared accommodation, said it had asked insurance companies if they were interested in taking the business but none had done so.