Rising claims are forcing up the cost of business insurance to "unsustainable levels", according to the CBI.
In a statement on what it called the growing "compensation culture", it revealed that charges have gone up as the insurance industry has struggled to meet costs.
In its response to a government review of employers' liability cover, the CBI highlighted that insurers have been forced to payout £1.30 for every £1 of premium income.
CBI director-general Digby Jones said: "The rise in insurance premiums is happening at the worst possible moment for many in business.
"Small firms and 'high hazard' industries face particular difficulties over the cost and availability of cover."
Outlining its proposals to deal with the problem, the CBI said it wants the chancellor to cut insurance costs by refunding some of the recent £300m insurance premium tax windfall.
Another proposal is to make claimants pay a greater share of the costs if they lose a case.
