Market analysts Datamonitor issued the warning after research found that EL rates were drifting downwards for a second consecutive year.

If small businesses were to face major rate hikes it could have drastic consequences for the SME sector. When insurers hoisted major increases on the market in 2002 many small businesses were left with hefty business insurance bills.

Datamonitor said premium income for the insurance sector fell by 7.4 percent whilst the number of players in the market continues to drift upwards.

Insurers looking to gain market share had piled downward pressure on ratings. While three of the top ten EL insurers achieved an increase in market share only two had achieved a rate increase.

According to Datamonitor: “Premium rates rises will soon be required if the market’s new found profitability is to be maintained.”