Failure to tackle the insurance crisis is undermining the competitiveness of the construction industry and costing jobs, the Construction Industry Federation (CIF) said yesterday.

It urged the incoming Government to present clear, coherent and workable proposals to deal with the issue.

Employers and public liability insurance for construction rose by 40-45 per cent in 2001, the federation said, adding that a CIF internal survey showed premiums were rising by 45-50 per cent this year.

"The prediction is for further steep rises in the years ahead," it said.

"The rising cost of insurance is now threatening the viability of small and medium-sized companies. Insurance costs are also proving an insurmountable hurdle for many start-up construction businesses," the federation asserts. "Rising insurance costs are now a significant factor in construction inflation. This should be of immediate concern to the Government because public sector construction accounts for approximately 35 per cent of the overall construction output."

Among the key issues, which the federation says need to be addressed are a lack of a genuinely competitive insurance market in Ireland and the regulatory environment at national and EU level to prevent the recurrence of the Independent Insurance Company style collapse.

"There is an urgent need for a regulator in the Irish market which will have powers to examine and compare premiums in Ireland and in other markets and which will be able to determine issues of competition, fairness and access to insurance," it said.

Legal and associated costs should be controlled, the federation maintains, and it also called for the establishment of a Personal Injuries Assessment Board.

"Such an approach would significantly reduce the cost of processing claims, which currently runs at 40-45 per cent of the cost of the claim," said the CIF.

It also said the 2 per cent levy on insurance premiums should be used as a separate fund to protect policyholders in the event of an insurance company failure.