The cost to businesses of obtaining liability cover insurance is set to rise due to underwriters increasing premiums.

The insurance group Zurich recently confirmed that it will lift premiums by at least 6% - bringing them to a total of 8% - and therefore in line with claims inflation.

"The deteriorating economic climate will reduce investment returns for everybody, including insurers, and this has been factored into pricing," said Graham Prior of Zurich.

New premium increases are likely to raise fears of a repeat of the liability crisis of 2002, when some premiums increased by more than ten times their standard amount, leaving some small businesses unable to afford Employer's Liability insurance.