Claims farmer goes into administration as cash hunt fails
Failure to find new funding and underwriting facilities were blamed for the demise of another no-win, no-fee company last week.
Life Repair Group went into administration on 28 November.
Claims at the Life Repair Group were underwritten by GoshawK's Lloyd's Syndicate 102, among others. The syndicate went into run-off last month, having been hit by the collapse earlier this year of The Accident Group (TAG), some of whose business it also underwrote.
Administrator Begbies Traynor said the collapse was part of a "knock-on-effect" of the failures of TAG and Claims Direct, which folded in 2002.
GoshawK chairman Paul Spencer said the syndicate had stopped underwriting Life Repair Group policies in August.
Attempts to secure new funding failed, leaving the company, formerly known as The Compensation Group, unable to meet its £350,000 wage bill. The 200 employees of the Lancashire-based company have been made redundant.
Begbies Traynor joint administrator Paul Stanley said: "The whole sector is facing turbulent times because funders and insurers have growing doubts about the speed with which some claims companies are expanding."
He added: "As a business model, the no-win, no-fee company just doesn't work. There is something fundamentally wrong with it."
Stanley said he believed some companies were making the necessary changes but added: "We expect further failures in this sector."
The draft guidelines will be adopted by the organisation's 80 members and could be incorporated into the government's working party report into the claims management industry.
PIF chief executive Ray Clewer said: "The industry is in an appalling state. Its credibility is at its lowest ebb and the sooner it is cleaned up the better it will be for the industry and, more importantly, for the consumer."