SOARING insurance premiums could force businesses in York and North Yorkshire to close.

Almost ten per cent of manufacturing companies and more than eight per cent of other businesses in Yorkshire have been refused employers' and public liability insurance cover, according to a survey by Yorkshire and Humber Chambers of Commerce.

For some companies, insurance has simply become too expensive.

Len Cruddas, chief executive of York and North Yorkshire Chamber of Commerce, which took part in the survey, said the rising cost of insurance was one of the hot issues affecting businesses in the area.

"If businesses can't get cover, they can't trade, it's just not viable. "And if they are being refused cover despite the fact that they don't have a bad claims record then it's bad news," he said.

The survey revealed 19.3 per cent of manufacturing businesses have seen their premiums rocket by 100 per cent while three per cent of all businesses have faced increases of up to 200 per cent.

Mr Cruddas said the businesses in York and North Yorkshire that were experiencing problems were ones with high risk activities such as construction, manufacturing, or dealing with hazardous substances.

The survey showed 9.7 per cent of manufacturing businesses questioned had been refused cover with 33.3 per cent of those being refused up to five times.

Up to 8.2 per cent of other businesses had been refused cover with 18.2 per cent being refused up to five times.

These refusals could force businesses to close down as employer's and public liability insurance are a legal prerequisite for trading in Britain.

Now Yorkshire and Humber Chambers of Commerce want an assurance from the Government and the Association of British Insurers that businesses will not have to shoulder similar increases next year and beyond.

They want an investigation into refusals by insurance companies to provide businesses with cover.

Chief executive Martin Hathaway said: "The insurance industry is putting this region out of business by refusing cover and increasing insurance premiums to totally unrealistic levels.

"We will be lobbying the Government hard to put an end to this.

"The issue of soaring insurance premiums has been raised by our membership with increasing urgency."

Updated: 13:53 Wednesday, December 10, 2003