Irish companies holding policies with the collapsed British Independent Insurance group have found they do not have the same rights as UK policyholders despite the existence of a single European market for insurance. The collapse will now trigger debate about the rights of European consumers. A spokesman for the Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, said she was urgently examining the consequences of the collapse for Irish policyholders.

A number of Irish companies were forced to rearrange cover in a hurry this week after the appointment of a provisional liquidator to the group. Most are believed to be in the construction sector and would not have been able to continue their business without employer's liability insurance to cover the cost of any accidents.

There is uncertainty as to whether claims submitted or due to be submitted by Irish companies will be honoured by Independent Insurance. UK policyholders who have employers' liability insurance will have recourse to compensation through the Policyholders Protection Board but Irish companies do not qualify.

Mr Paul Carty, chief executive of the Insurance Brokers' Association, said it would be making representations to the European Commission through its Brussels-based international association.

The anomaly goes against the spirit of the single market and suggests that consumers do not have equal rights in the various EU states.

Independent Insurance sold policies here initially directly from the UK and in the past year through a Dublin-based branch. As a branch rather than a subsidiary, policies were being issued by the UK company yet, despite holding identical policies to UK customers, Irish consumers' claims will not be compensated.

Effectively their premiums will be used to pay out claims in the UK while they have to incur additional insurance costs.

Meanwhile, two of the firm's executive directors denied any knowledge about the reinsurance contracts that played an important part in the collapse of the company. Finance director, Mr Dennis Lomas and deputy managing director, Mr Phillip Condon, said they had not been told about the contracts. Independent's plan to launch a £180 million sterling(#294 million) rescue rights issue failed after the discovery of four reinsurance contracts that put it at financial risk.