LARGE increases in Employers Liability insurance premiums are hindering growth for Bolton businesses, according to Chamber Business Connections.

More than 80 per cent of local companies have seen notable increases in their EL compulsory insurance over the last 12 months, according to results from the latest survey from CBC, the trading arm of the North Manchester Chamber of Commerce.

Almost half of the businesses responding to the survey reported increases of between 20 per cent and 50 per cent, with 15 per cent of businesses seeing their premiums more than double over the last 12 months.

The effects of these increases were stark yet predictable, with 86 per cent of businesses stating that EL costs had reduced the profitability of their business. Nearly a third of respondents stated that the costs had led to them cutting their investment levels.

Construction and manufacturing companies saw the biggest rises. Both sectors have claimed that spiralling insurance costs have contributed to profit and investment cutbacks in recent years.

David Peacock, the Chief Executive of CBC, said that the issue of insurance costs to businesses needed to be examined at a national level. "These results act as a warning to the Government that rapid growth in insurance premiums may be hindering certain sectors within the UK economy," he said.

However, Roy Watkinson, Commercial Lines Business Manager for AXA Insurance, which has 385 claims and underwriting staff in Bolton, said that premium increases were an unpalatable but inevitable fact of life.

He said: "Premium rates are going up, but it is still the most unprofitable business line. And law firms offering no-win-no-fee compensation for accidents at work has driven up the EL premiums, especially in the construction sector, which generally has the largest volume of high-value claims."

Mr Watkinson added that, in general, premium increases had dropped this year. "The increase is actually lower than the 2002-03 period, which saw rises of 20 per cent or more."