Insurance costs, which have nearly trebled in three years, have cost the small business sector at least 3,000 jobs, an Oireachtas committee investigating the high cost of cover heard yesterday

The chief executive of ISME (Irish Small and Medium Sized Enterprise association), Mr Mark Fielding, told the committee on enterprise and small business, that his organisation found the cost of insurance had risen by 290 per cent on average over the last three years. He said the average rise for 2003 alone was 52 per cent.

Based on ISME's research and that carried out by other bodies, he said the crisis had forced the closure of an estimated 100 small businesses, with the loss of 3,000 jobs, over the last two years.

"The situation has now become unsustainable, with many companies either seriously underinsured or trading with no insurance whatsoever," he said. "Insurance increases are driving many small and medium-sized enterprises out of business, wiping out profits, draining reserves and, in some instances, even forcing companies into the shadow economy."

Mr Tony Briscoe, director of employers' group IBEC, warned that increases were now eroding operating profits and, in some cases, were leading to significant losses in operating results.

Mr Briscoe said his organisation's research had found business paid €2 billion a-year in compensation.

He added that IBEC members had seen insurance costs double on average over the last three years. IBEC surveys found the average cost of an employer's liability claim was €30,000. Public liability claims averaged €8,800, he said, but added there were differences of as much as €6,300 between cases settled early in the process and those settled on the court's steps.

Mr Briscoe told the meeting that the rate of workplace injuries in Ireland was 1,291 per 100,000 - far below the European average of 4,000 per 100,000. "Even if the skew on that figure was 100 per cent, we would still have half the European average," he said.

Mr Fielding argued that "the blame lay firmly at the door of the insurance companies". He said high returns from equities ensured the industry had profits ranging from 8 per cent to 40 per cent in the 1990s. This was even though, during the same period, they paid out €105 to €114 for each €100 they took in premium income.

"They were quids in," he said. "They were just not interested in sorting the industry out. They had a nice easy deal with the legal professions and the medical professions. And then when they started to feel the squeeze in equities, they started to blame everybody else."

Mr Fielding said Irish business was still carrying the burden of the €100 million payout it faced as a result of the 2001 collapse of Independent Insurance, the British company which underwrote both employers and motorists here.

He said he was aware of one company facing a €400,000 payout as a result of the collapse.