Thousands of Irish jobs are under threat because of insurance costs associated with an "out-of-control Irish compensation culture", Supermac's managing director, Mr Pat McDonagh said yesterday.

Marking the launch of the Alliance for Insurance Reform, a lobby group comprising 400 Irish businesses, Mr McDonagh said Irish jobs would be lost unless rising public and employer liability insurance premiums were stemmed immediately. He said Irish companies had already sacrificed more than 1,000 jobs this year as they struggled to allocate resources to insurance costs that had risen, in some cases, by more than 1,000 per cent, and warned that more could go if the situation was not remedied by the incoming Government.

"In most businesses, insurance is either the second or third-highest cost," said Mr McDonagh.

The Supermac boss first brought his frustration to public prominence earlier this year when he released footage of a personal injury claimant feigning a fall in a Supermac's restaurant.

"Irish business cannot sustain this form of criminal extortion from people looking to scam money for nothing," said Mr McDonagh, who believes the legal profession and the insurance industry need to be "reined in" on the issue of personal injury claims.

Senator Feargal Quinn, managing director of Superquinn and fellow alliance member, said exaggerated and spurious compensation claims represented "sabotage" on Irish business.

Senator Quinn believes claimants are in some cases encouraged by lawyers to take actions. "They are led to believe they will settle out of court," he said. "I believe this is a national crisis, but it is possible to do something about it."

The alliance yesterday issued five specific demands which it says would help to address the current problems. Among these is a call for the immediate establishment of the Personal Injury Assessment Board and the drafting of standardised rules for injury awards in the Circuit and District Courts. The association also believes fraudulent claimants must be pursued and jailed and that judges should be obliged to refer fraudulent or exaggerated claims to the Garda for investigation.

Mr McDonagh said he was heartened by the inclusion of these issues in the Programme for Government, but said the alliance would ask the Government to go further by halting the implementation of increased payment limits for personal injury claims contained within the Courts Bill 2002.

The alliance will also call on the Government to reconsider its intention to make employer liability insurance compulsory. Small Firms Association director, Mr Pat Delaney, yesterday likened the move to "stepping off the iceberg and on to the Titanic".

Responding to the launch of the alliance, the Irish Insurance Federation (IIF) yesterday said it supported the group's five demands but dismissed allegations of cartels among insurance companies and blamed the rise in legal costs for premium increases. For its part, the Law Society said litigation costs had not risen along with insurance premiums and attributed the blame for premium rises to the insurance industry.