BUSINESSES in the south will be forced to close and jobs will be lost if the government doesn't tackle the soaring cost of employers' liability compulsory insurance, it was claimed today.

Portsmouth and South East Hampshire Chamber of Commerce and Industry says the mounting costs of the insurance is already causing firms to go to the wall.

In the British Chamber of Commerce Insurance Survey of late 2002, 11 per cent of companies reported premiums more than doubling on the previous year's levels, and 15 per cent of manufacturers reported a rise of more than 100 per cent in one year.

The Portsmouth chamber

has suggested solutions to this problem.

These include that for uncontested or simple claims, insurers could settle without legal intermediation, avoiding contingent fee arrangements.

The government should also reconsider the imposition of insurance premium tax on the compulsory insurance, which has increased costs.

It should also provide support or tax relief for industry-wide schemes that will provide part-payment of compensation where firms have met all reasonable measures to mitigate risks to employees and where costs of claims are long after the event.

Maureen Newton, membership services officer of the Portsmouth and South East Hampshire Chamber of Commerce and Industry, said: "There is an even greater worry for business given the moves at European level around environmental liability, as well as the government's intention to charge businesses for costs to the NHS from accidents at work.

"If these moves create additional insurance bills, or even further increases in existing insurance charges, then more businesses will cease trading and even more jobs will be lost."

David Frost, director general of the British Chambers of Commerce, said: "We are very disappointed that the urgent action that we urged on this issue in our submission has not been taken.

"Companies are ceasing trading every week because they can no longer afford the soaring premiums.

"More consultation and report-writing is not going to keep these companies in business nor their employees in work.