Irish firms spend twice the European average on insurance at 2 per cent of the payroll.

In some cases, and in particular sectors such as wood finishing, steel erection and leisure, liability insurance is as high as 20 per cent of payroll costs. Despite having one of the lowest work injury rates in Europe, the Republic has twice the claims made in Britain and settlements are higher. The average employer's liability award in the UK is £5,000 (#6,348) compared with £13,000 here.

According to Mr Pat Delaney of the Small Firms Association, for every £100 a small business in Ireland pays in public liability premiums, a British counterpart will pay £34 and a Dutch counterpart £14.

Irish businesses also have to consider taking out several other forms of insurance cover. These include property, product liability and often motor insurance. Many will need plant insurance, goods in transit cover, export credit insurance, key person insurance, business interruption insurance, fidelity guarantee cover and even cyber liability insurance - which safeguards against employees carrying out illegal acts over the Internet.

Most small firms now purchase their diverse insurance needs in a customised package provided by a single insurer. So what can people do to ensure their insurance bills don't sink them?

Health and safety is one key issue to consider. A risk that is not detected in time could ultimately cost far more than its prevention.

For some businesses, implementing a risk management programme can be the most effective way to reduce insurance costs. Some insurance companies offer these programmes with lower premiums. Many of the larger brokerages also provide risk management advice.

A small firm can appoint a health and safety officer who would be familiar with the legislation and potential accident hazards. The fact that someone is fulfilling this role has the dual effect of reducing the risk of accidents and pleasing the insurer.

But the knock-on effect of good risk management on premiums won't be seen until the combined policy is renewed the following year.

Mr William Ryan, manager of risk management services with Hibernian General Insurance says companies should seek advice on a disaster recovery plan.

"In the event of fire, flood or storm damage, or even a serious burglary, a business should have a plan in place to deal with loss of equipment, stock and records. Business interruption - loss of profits insurance is usually attached to property insurance and covers this area." When a company takes out insurance for the first time it should ensure the broker or the insurance company calls out to survey the premises. Any recommended security and risk control devices or improvements should be implemented.

A standard insurance package usually contains seven or eight elements. Therefore, it's important to get good independent advice from a broker about which insurance provider has the best cover to offer for a particular case.

The main companies who insure the small business sector are Hibernian, Allianz and Royal & Sun Alliance.

The advantage of a package is that the different types of cover dovetail with one another, theoretically leaving no gaps. The price is usually also attractive because you are getting everything from one provider. That's not to say that a broker couldn't design a package taking different elements from different insurers.

Mr Michael Kemp, chief executive of the Irish Insurance Federation advises small companies not to concentrate only on the price but to take into account what ancillary services are offered.

The level of services such as risk management advice varies from one insurance company to another. It is also important to be aware of the excess on the policy if there is one.

In many cases the excess is optional but clients should be aware that they may be obliged to pay up to a certain amount (possibly several thousand pounds) on certain claims.

Carrying some of the claim costs to bring down premiums can make financial sense, particularly with well-resourced companies. The golden rule of taking out insurance, according to Mr Paul Carty, chief executive of the Irish Brokers Association, is to protect your assets and exposure to liabilities against all appropriate perils.

Mr Carty also points out that if your broker doesn't have professional indemnity insurance you could be in a vulnerable position.

"It's essential to ask the brokerage if they have professional indemnity insurance and if they say yes, ask to see it. "If they don't then you would be high and dry if they were to make a mistake."

The Small Firms Association is running a conference on personal injury claims in Ireland on Tuesday, November 7th. Speakers will include experts on law, public liability, claims handling, private investigation and occupational health and safety.