Claims Direct, the personal injury claims specialist, has agreed a £100m deal with Abbey National to fund claimants' insurance costs.

First National Bank, which is an Abbey National subsidiary, is to offer every Claims Direct customer a loan for after-the-event legal expenses cover so they can pursue their claim.

Customers of Claims Direct will also be entitled to open an instant access savings account with Abbey to deposit any damages they receive. They will be offered financial advice on how best to invest the compensation.

The arrangement is designed to meet the increasing demand for after-the-event legal expenses cover following the drastic reduction in legal aid for personal injury claims last April.

Claimants who lose their cases have their costs underwritten by Claims Direct at Lloyd's. Winning claimants have their legal bills paid by the losing party.

Claims Direct operates through 340 franchisee claims managers and 300 independent firms of solicitors. It has brought settlements in 10,000 cases – the average is for £4,000 since it started trading in 1995 and it currently receives more than 1,000 enquiries every day.

Claims Direct, which is forecasting a turnover for this year of £36m, is planning to float on the stock market later in 2000.

Its advertising budget for this year is believed to be in the region of £15m, with its marketing focused on working class groups who are over-represented in the more than two million personal accidents each year.