Four in 10 companies were forced to borrow to meet "unsustainable" insurance premium rises this year, according to a study by the Alliance for Insurance Reform.

So drastic were the increases, 14 per cent of 173 surveyed firms had to cut jobs as a result, the alliance told an Oireachtas Committee examining reforms of the insurance sector. Alliance chairman Mr Pat McDonagh urged the Government to draft "realistic and reasonable" guidelines limiting the size of personal injuries payouts, reflective of the significantly lower awards made in Europe and the United States.

The long-awaited personal injuries assessment board should be immediately established on an interim basis, with its remit extended beyond employer liability to public liability and motor claims, Mr McDonagh told the Committee on Enterprise and Small Business.

He also called for fraudulent claims to be made a criminal offence, backed by the threat of criminal sanction and for the Government to encourage foreign insurers to enter the market, boosting competition.

"These figures demonstrate how Irish business is suffering from reduced investment and job losses," he said.

"The rise in insurance premiums is a serious impediment to profitability and competition in the Irish marketplace. The Irish economy will continue to slow down if more jobs are lost and businesses shut their doors due to premium hikes."

He added: "Ireland is already in danger of losing business to low-cost economies which can undercut our costs in a number of ways.

"We do not need to further blunt our competitive edge by ignoring the detrimental effect that insurance costs are having on our economy."

The committee was also addressed by the Irish Hotels Federation, which called for a two-week limit on lodging personal injury claims.

With premiums rising on average by 351 per cent in the past two years, hoteliers were no longer able to compete effectively with overseas rivals, federation chief executive Mr John Power said.

Foreign insurers were wary of the Irish market because the high level of claims made it hard to show a profit, he added.