The insurance industry is worried that it may have to meet more than the additional £150m bill on top of the £105m already being collected.

Although the possibility of the industry paying out for fire brigade and police service callouts is so far hypothetical, the prospect is worrying market practitioners. The government's practice of passing the responsibility for costs onto the insurance industry show few signs of abating, despite industry opposition.

The government announced in March that it wants companies to use their liability insurance to pay compensation to reduce the £200m a year paid out by the Criminal Injuries Compensation Scheme (CICS).

The scheme presently compensates victims of violent crime according to the severity of their injuries. Victims may also claim loss of earnings up to 500,000. Many claimants are injured in the course of their work, particularly public sector employees such as police officers and hospital workers.

The Home Office proposed cutting payouts made in "cases where someone is injured whilst at work" so that employers had more incentive to make workplaces safer. Both the Federation of Small Businesses (FSB) and the Association of British Insurers (ABI) were critical of the proposals.

A spokesman for the FSB, David Croucher, said: "It would be a terrible double blow for a small firm to be a victim of crime and then have to pay extra for that dubious privilege. Businesses shouldn't be penalised by the actions of criminals."

If the new proposals are accepted, employers would have to act as insurers for attacked employees, whether or not they have taken reasonable care. At present, they have a common law duty to take reasonable care and are subject to health and safety regulations. Even those who complied fully would still be liable for compensation if a staff member was the victim of a violent attack.

Small employers, who already find the costs of employer liability insurance expensive, would be hit the worst, and the scheme has been seen as equivalent to another tax on small businesses. The public sector would meet costs from existing budgets, but in the private sector, costs would have to be met by either the employer or its insurers.

The liability that has until now been met by the state would be transferred to individual businesses. A lack of insurance could cripple a business if the proposals were to be accepted.

The industry has warned that increased expensive regulation could result in an exodus of capital.