Claims Direct set to drop 300 firms from referral panel

Claims management company Claims Direct is set drastically to reduce the number of law firms on its panel, with only the largest fish in the pond surviving the changes.

The company's new business model, launched this week with the aim of turning around losses of more than 20 million in the last financial year, includes a slimmer panel of between 50 and 60 firms, a drop from the 350 that once worked with the company.

Solicitors will deal directly with clients following the abandonment of claims managers.

Former panel members will be invited to reapply, but only larger firms which are equipped to take on at least 25 cases a month and deal with processes on-line or by e-mail will be accepted.

It is anticipated that eventually firms will have to deal with 50 cases per month.

The company will offer two new after-the-event insurance policies, with road traffic accident premiums set at 500, and insurance for all other claims priced at 950.

Solicitors, rather than clients, will take out loans for the policies, with the cost treated as a disbursement.

Claims Direct said although it had arranged disbursement funding with a lender, firms would be free to obtain loans from their own sources.

It has also set up a customer contact centre in Telford, designed to cope with 2,000 cases each day.

The company admitted losses had increased in the last quarter of the financial year, and that 'the previously indicated second-half improvement in performance has not materialised', resulting in overall losses for 2000/2001 of 22 million.

The company also had to pay 'up to a maximum of 2.3 million' to extract itself from its former vetting solicitors Poole & Co, owned by former boss Colin Poole.

Chief operating officer David Gravell said he hoped the changes would re-establish the company's business and reputation, but refused to speculate on the potential effects on profits.

'We now want to emphasise quality of service to the client by looking at large professional firms which are well versed in personal injury work,' he explained.

Paula Rohan