The government has reiterated its belief the employers' liability (EL) market has not failed, and warned that operating without insurance was unacceptable.
Under-secretary for work and pensions Malcolm Wicks told the House of Commons last week that recent figures from insurers on the number of firms going out of business or trading without cover contrasted with the government's own evidence.
He said only five prosecutions had been brought each year for the past five years for non-compliance with statutory EL requirements.
"While we do not accept that there's been a general market failure, we're not complacent about the real difficulties faced by business in tough trading conditions, nor are we complacent about compliance," Wicks said.
"It's unacceptable for any firm to trade uninsured."
There is a £2,500 penalty for failing to obtain EL cover.
Wicks was responding to a question on 17 December by Twickenham MP Vincent Cable.
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