Hundreds of bouncy castle operators face going out of business following a decision by the industry’s main UK-based insurance provider to withdraw from the Irish market.

In what is the latest blow to small firms dependent on public liability cover, a spokesman for the industry said the move followed concerns about the claims environment in Ireland.

Gerry Frawley of the Irish Inflatable Hirers Federation (IIHF) said the decision was made by Axa XL, the underwriter of the UK-based Leisure Insure that announced it was ending cover this week.

It is believed to be the only, or principal, provider of such insurance in Ireland. Mr Frawley said the reason for the withdrawal was “that it’s uneconomically viable to offer cover; in other words they were afraid of the judicial system in this country, and our book of quantum [setting out payment guidelines], and our large awards.”

Current policies will be honoured but not renewed from the beginning of August, affecting 280 IIHF members directly, but also many of the 700 other bouncy castle companies that are not members of the IIHF.

Efforts are under way by the IIHF to find alternative cover.

“As you all know this industry has had a difficult few years regarding Public Liability Insurance not least increased premiums and quote refusals,” the IIHF said in a recent statement to its members, announcing the decision.

According to Mr Frawley premiums had recently risen from about €200 per unit per year to as high as €300 although claims were very rare. A large-scale withdrawal of cover, he said, will lead to concerns over operators working without insurance, threatening safety standards.

Closures Management at Pelican Promotions, a Co Louth company employing up to 36 people and with a store of 224 bouncy castles and inflatables, told their office staff the news on Thursday.

“We have to close down,” said the family business owner Mandy Fee leaving no room for doubt. She said the firm had always been extremely safety conscious and had not had a successful insurance claim since they set up in 1991.

“We can’t even sell off the business; who’s going to buy it? It’s not just a case of closing down; it’s a case of me losing everything,” she said.

Pelican had considered moving its business to Northern Ireland at one point but were told by insurers there they would not cover the company’s activities in the Republic. As with other business owners, Ms Fee believes the scale of compensation payouts compared to elsewhere in Europe is to blame.

‘So many people’ The losses will extend to other areas of the industry. Pelican has bookings until next May and uses face-painters and entertainers at corporate events around the country. This work amounts to 60 per cent of its business: “This affects so many people,” Ms Fee said.

Both Pelican and the IIHF pointed to the demise in outdoor activities available to children as a result of the insurance issue.

AXA XL said in a statement it had undergone a “strategic review” of its business with LeisureInsure and would not be renewing its Irish business as of August 1st.

“We have concluded that current, well-documented market dynamics, mean this business does not fit our business plan going forward. Leisure Insure could be reached for comment last night.

Leisure Insure could be reached for comment on Friday night. However, a statement the IIHF said it had received on behalf of AXA XL explained it had “undergone a strategic review of our business with LeisureInsure Ltd in Ireland. We have concluded that current market dynamics mean this business does not fit our business plan going forward”.