Martin McEvoy is a self made man. He bought out the steel construction company he worked for in Finglas and now employs about 45 people. His walls are festooned with safety certificates, proof of courses taken by him, his co-director and company engineers.

Claims against his company are rare. Where he believes a claim is "not real", he will contest it fiercely - to the point of employing private investigators - and no single award has ever gone over £12,000. But where a claim is "real. . . where a man say, is on a ladder and slips and breaks an ankle while doing a job for me, I will not contest it. I think all employers want to be fair. Where a lot of these cases go wrong is that they start off small but develop in the pub".

Generally, the company's record with people, he says, is excellent. "We had a bad experience last year with a public liability claim for £200,000. No one was hurt; a fault developed in a job we did that stopped the plant. I didn't argue. It was my first claim on the public liability policy and I paid half of it myself. I've no `burning factors' as they call them, no claims pending".

Yet this year, in common with many companies, his insurance premiums jumped massively - in his case, from £80,000 to £100,000, on a turnover of just £3.5 million.

"It's costing us £2,000 a week in insurance just to open our gates. I feel very sore about it. We're doing all we can but the insurance companies are saying `go to hell'. We have fewer claims but the insurance premiums are just steaming on. After all the talk about mergers creating greater efficiency and lower costs, all we can see is that they've moved to better offices and that the merging has taken the competition out of it.

"I believe it's a cartel. They have a captive market; you have to have insurance but they can do what they like. When you ask why premiums are going up, they'll tell you the market is `hardening'. Hardening. That's the big buzz word now."

"Hardening of the market," was the reason given by insurers to half the respondents in a new IBEC survey on personal injury claims. A hundred companies reported that their average insurance costs had increased by more than 40 per cent between 1999 and 2001. Yet according to IBEC's findings, the average level of employers' liability claims had fallen by 21 per cent and public liability by 9 per cent in the same period.

Occupational injuries had also fallen, according to the number of benefit claimants at the Department of Social, Community and Family Affairs - from 809 per 100,000 in 1997 to 690 per 100,000 in 2000.

Although insurance companies blame increasing claims for rising premiums, nearly a third of IBEC's respondents ironically complained about the insurance companies' readiness to settle claims out of court.

This is happening against a backdrop of insurance industry reluctance to surrender raw data requested by the Motor Insurance Advisory Board to assist in its investigations into premium charges. And while the general view to date has been that insurance charges have been justified by claims costs, interested bodies are taking another look - not just at the considerable investment income which accrues to insurers and which the public rarely hears about, but also at management's expenses, which have grown at a "phenomenal" rate, according to one source.

Figures can also mean whatever you want them to mean. While a company like AXA claims losses of £4 million in its latest accounts, a closer reading reveals that the company achieved this loss by instituting a more conservative reserving policy, into which it shovelled an added £23 million. "If you ignore that," says a source, "the £4 million loss becomes a £19 million profit."

The sands are shifting around the insurance companies. Although the "nuisance value" of a claim can still be as high as £10,000 (i.e. the amount required to make the case go away, even where it has little merit), there is evidence that employers are "stiffening up", in the words of Martin McEvoy.

CIE - keen to advertise that it is no soft touch - is now winning 75 per cent of the cases it fights. And companies are pursuing costs; there are cases where losing claimants have been ordered to pay £10 a week and will be doing that for a long time.

Judges too are perceived to be stiffening up. Judge Liam Devally of the Circuit Court is one of those fast gaining a reputation for a robust approach. A woman who made a claim after "falling" at a bingo session had it dismissed by Judge Devally as "blatantly dishonest, shameless and bogus". No negligence; ergo no compensation. Many solicitors applaud this attitude, regarding it as long overdue.

Doctors - whose contribution to the compensation culture is less obvious but nonetheless significant - have also come under scrutiny, accused by a former IMO president of "saying what they believed the client wanted them to say. . . "

Legal fees came under scrutiny again last week as a result of the IBEC survey. While this purported to show that "legal costs only" (i.e. solicitors' and barristers' fees) accounted for an average of up to 44 per cent of total settlement figures, this was hotly contested by Ken Murphy, director general of the Law Society.

"I'm quite sure that the term `legal costs' would be the standard industry term to represent all non-compensation outlay, which would include not only solicitors' and barristers' fees, but 20 per cent VAT, professional witnesses', medical and actuarial fees. We'd say it would be probably less than 20 per cent of the total settlement costs," said Mr Murphy.

Tony Briscoe, assistant social policy director of IBEC, points out that as 80 per cent of these cases are settled either directly between the company and the employee or between the company and the claimant's solicitor, they would not have reached the point where court witnesses were required. So where exactly does the other 24 per cent of that 44 per cent total go?

Dorothea Dowling of the Motor Insurance Advisory Board says the board will shortly be inviting submissions from claimants whose solicitors have been demanding a proportion of the compensation award, on top of their "party and party" costs. "Say a settlement is for £10,000. Anecdotally, we're being told that plaintiffs are being asked for 10 per cent of that, on top of the costs the solicitors are getting from the insurance company".

What is indisputable is that the average cost of personal injury settlements has soared. In 1986, the average cost was £8,953; in 1994 it was £13,116; in 1999 it was £24,400.

The Government now proposes to establish a Personal Injuries Assessment Board, "an independent forum which will decide on compensation for injured parties quickly and in an unintimidating environment".

The board's only job will be to decide on the amount to be paid, says the statement, and it will work "very much" on the basis of precedents created by the court. "There is no intention to reduce the amounts of awards. . ." Where liability is disputed, that will remain a matter for the courts.

The Bar Council and the Law Society stand to lose the most from this initiative but wisely say nothing about their own potential loss of income. They complain instead about a new layer of bureaucracy and the possibility of additional costs as a result. But aren't the vast majority of cases settled before court anyway?

"Yes", says Ken Murphy, "But there's nothing like the process funnelling you towards a court to make a settlement happen".

But the people they are most concerned about, they say, are the victims, the injured employees, who, they insist, will be deprived of adequate compensation. They claim that the real agenda is to reduce compensation amounts, based on the fact that the insurance industry will be represented on the board.

Voices from the coalface tell a different story of a legal system which militates against what they believe should be everybody's primary objective for an injured employee - getting him or her safely and speedily back to work. Beverley Webster, employed by the Rehab Group to manage a project called Workforce Plus, to provide early intervention services for injured employees with that objective in mind, says that in these cases, time is the enemy.

"The longer you leave someone out there, the less likely it is that they will ever go back to work", she says, quoting figures to prove her case. "In this liability system, where it can take two to three years for a case to come to court and where your claim depends on maximising your disability, it may not be in your interest during that time to go back to work".

Ms Webster would favour changing the liability system completely, probably in favour of some version of the no-fault insurance schemes in use around the world.

But this, say employers, would simply transfer all the responsibility to them. For now, the Government's proposal for a Personal Injuries Assessment Board is the only alternative on offer. Even now, the legal howitzers are being swivelled towards Leinster House.