A Gwent scaffolding firm with no insurance claims in its five-year history faced a staggering 550 per cent hike in its public liability premium this week.

And it's not the only one to feel the pinch. Business Argus has learned that many other companies in the UK are chasing fewer and fewer insurance companies willing to give them cover at a reasonable price.

Rushar, which employs 28 in Newport and Swansea, says it has been told premiums have increased because of September 11 and the increasing number of claimants using the services of the legal profession's increasingly-popular 'no win, no fee' services.

Rushar was insured last August for £16,000 by Charringtons, which has pulled out of construction industry business. Yesterday, the only alternative written quote received was for £88,000.

Brokers have been looking desperately for an alternative and cheaper quotation. "Within the construction industry, scaffolders, roofers and steel-erectors have been identified as extreme risk", said company boss David Harrhy. "Hence the massive increase to ourselves.

"We couldn't work without insurance - we have too much integrity to do that. Liability insurance is a legal requirement and we should not be held to ransom by a cartel of companies."

Mr Harrhy is annoyed because the company has no claims against its premium. It had budgeted for a 25 per cent increase on its £16,000 annual premium but nothing like the one imposed.

"We do a lot of work for local authorities and the majority of the work is not even high risk", he said. "We currently have scaffolding on the Newport town bridge but it's hardly a risk".

An alternative policy quoted restrictions which would have meant the company could not work above 50 feet or in the petro-chemical industry.

These represent a small per centage of Rushar's £800,000 a year turnover and if they were cut adrift it would not effect the company too much, but other work would have to be found to make up the shortfall.

Mr Harrhy, a member of the National Federation of builders, is also angry that the problem has not been aired widely in the media and that the federation does not appear to have alerted the building trade.

A federation spokesman said several members had voiced their concerns.