The lucky companies, if they can be so called, claim they end up working for insurance firms. Laura Slattery reports on growing difficulties in the area.

"Our premiums are three-and-a- half times what they were last year, which is just crazy," says Mr Ron McPartland, chief executive of Patron Distributors, a supplier of health and safety and emergency response equipment.

On July 31st this year, the renewal date for the company's insurance policy arrived, without any new policy in sight.

"Our renewal date passed and our brokers told us, sorry, we don't have any cover for you," explains Mr McPartland. Patron has been in business for 15 years, and has not had any claims in the last eight.

"We managed to get an extension of three weeks, and eventually, after the great efforts of our brokers, we got insurance for one year only, with no guarantee that it will be renewed next year. We were glad to get it. It took a lot of pressure off, but the problem was the premiums had increased from €8,300 to €27,800."

Patron employs 15 people, with another five jobs in Premier Healthcare, its sister company based in Northern Ireland. The company was strong enough to avoid redundancies, but Mr McPartland describes the insurance increase as "a very huge hit for any company to take".

A number of the company's contracts with regional health boards were fixed, so the cost couldn't always be passed on to customers. And a new measure, stating that companies bidding for public tender contracts must have specified levels of insurance in place - over €6 million each for public and product liability - only added to their insurance woes.

"No normal insurance policy would cover that amount, it would cover maybe about 70 per cent of it. We had to go looking for the balance, so the hunt was on again," Mr McPartland says. The new levels of cover added more than €5,000 to the bill. "That took us up to €33,500. We managed to get it down to €32,000," he says - four times what the company paid last year.

As an accountant, Ms Eilis Quinlan is all too aware of the effects high insurance premiums are having on businesses. She can see it in her clients' books and she can see it on her own balance sheet. "I've been in business for 10 years and I've never had a claim. It's outrageous what the insurance companies are charging," says Ms Quinlan, who employs nine people at her accountancy firm, Eilis J Quinlan, in Naas.

"I have four policies altogether and the increases on them have been between 31 per cent and 175 per cent," she explains.

For her accounting licence, Ms Quinlan must have professional indemnity insurance. "Then there's motor insurance, which is also compulsory, then general assets and building insurance, including public liability," she says. It was this last policy that recorded the 175 per cent increase.

"The first renewal demand for two of the policies came 10 days after the renewal date, so I was in a bit of a bind. There was no correspondence to let me know, no warning," says Ms Quinlan. "I tried to shop around, but there are so few companies insuring small businesses in Ireland and a couple of them wouldn't quote me."

When Ms Quinlan did find insurance through a new broker in June, she found the percentage of her turnover she would have to devote to insurance premiums had more than doubled. "The amount of insurance I'm paying has increased from 3 per cent of my turnover to nearly 7 per cent of my turnover," she says.

The bill tops €7,500 a year, most of which is made up by professional indemnity insurance and buildings insurance.

Ms Quinlan is not alone. When the cost of insurance is included in cash-flow projections for clients, there are a lot of appalled, disillusioned faces in the office.

"A number of my clients are talking about closing up, because such a huge percentage of their profits are being eaten up. It's even threatening start-ups. In two cases, the people just stayed with their PAYE job."

Another business with no history of claims, the Meath-based manufacturing company Hand Engineering, has laid off two of its 13 full-time employees this year due to the rise in its insurance bill.

It could have been worse. In July, the company closed for a week while it was searching for insurance, after Lloyds, its original UK-based insurer, pulled out. "We had already told all the lads that their jobs were on the line," says Mr John Hand, managing director of the firm. When Mr Hand found alternative cover, the price had trebled, from €11,000 last year to €35,000. "We weren't expecting that much of a rise. We were expecting it to cost about 50 per cent more, so that's what we were budgeting for," he says. "We're struggling by all the time, working to pay the insurance. There's no room for development."

Ms Shirley O'Kelly, owner of O'Kelly's Sawmill in Rathfarnham, Dublin, tells a similar story. "Our profits are gone. We're working for the insurance company now," she says.

Last year, the total insurance bill for the company came to €44,000. This year, it's €113,000. "We were lucky to get cover; it got us out of a hole, but what worries us is that the premiums are up so high now. They're not coming down," Ms O'Kelly says.

The garden equipment manufacturer's insurer refused to renew the policy, giving no reason. Ms O'Kelly then contacted the Small Firms Association, who arranged for an insurer to quote the sawmill for employer and public liability, subject to a survey of the premises. But this jumped from €24,000 last year to €71,500 this year.

"It was a huge increase for us. We sat down and went through all the pros and cons and decided we would pay it, stay in business and fight afterwards."

Ms O'Kelly and her husband, Mr Henry O'Kelly, employ 26 people at the sawmill. "They're young lads with families, cars and mortgages, and they've been with us for 10 years or almost 10 years. We didn't want to turn around and say your job is gone," she says.

As a manufacturing company, O'Kelly's Sawmill is classed as high-risk, despite its own lack of claims history.

"We felt that we didn't have any claims, so why are we being penalised? We comply with all the health and safety legislation, all our employees wear safety clothing and we employ someone to keep the yard clean and tidy to prevent accidents."