Dublin's €635m (£387m) light rail system, LUAS, has emerged as one of Ireland's most high-profile victims of last July's collapse of Independent Insurance.

The government-backed venture, currently under construction at sites across the capital, was forced to almost double its public liability premium to €1m (£610,000) to secure a deal with an alternative insurer, it has emerged.

The scale of the increase is due to a number of reasons, including the lack of capacity in the Irish market; a general hardening of commercial rates; highly competitive quotes previously offered by Independent and Ireland's appalling claims experience across the liability classes.

The new public liability contract, with Tokyo-based Mitsui Sumitomo Insurance, also saw the policy excesses, or the amount LUAS must self-insure per claim, increase four-fold to €12,700 (£7,758).

Insurance broker Jardine Lloyd Thompson placed the policy, which lasts until the end of 2003, with Mitsui's London management company, Mitsui Sumitomo Insurance (London Management), which only began underwriting in the London Market in April 2000.

A LUAS spokesman confirmed the new relationship and added that the project, Ireland's largest ever public transport infrastructure scheme, had been without cover for just 12 hours after the Independent collapse.

Mitsui is well-known for the emphasis it puts on clients managing their own risk and carrying a self-insured retention. Mitsui marketing and development manager Jeremy Stevenson said: "We were pleased to be involved in writing the contract at terms that the client and we were happy with."

In the wake of Independent, employers have been sharply critical of the government for what they claim is a lack of support for affected businesses.

The employers' organisation Irish Business and Employers Confederation, the Construction Industry Federation and the Small Firms' Association have demanded government assistance in placing business with other insurers.