After-the-event legal expenses insurers are gearing up for rapid expansion after the

Government said legal aid will be stopped for most personal injury cases from April 1.

Legal aid is believed to support up to 80,000 personal injury cases every year.

The confirmation of the reforms is included in a report published this week by the Lord Chancellor's department.

The report details the Government's conclusions on conditional fee agreements (CFAs), following a consultation paper issued last year. It shows the Government has overcome any reservations and intends to introduce new regulations covering CFAs that will allow insurance premiums and success fees to be recovered from the losing party.

These two significant developments have been welcomed by leading after-the-event insurers. Richard Myrtle, managing director of new legal expenses insurer Universal Legal Protection, claimed the changes could lead to an "explosion" in demand.

"It means people can now bring legal actions without concerns about the cost," Myrtle said.

Myrtle, who helped set up the Law Society's after-the-event product Accident Line Protect, added: "The after-the-event legal expenses market is currently worth around £20 million, but could increase by up to ten times this amount over the next few years."

Brian Raincock, managing director of Litigation Protection, said the changes will allow solicitors to proceed with hundreds of claims they had been holding back while the issue of "recoverability" was being settled.

Raincock said the level of enquiries received by his firm had more than doubled in the past month to more than 200 a week. He added that funding was a fundamental issue for the market and his firm had arrangements with 40 solicitor firms to help fund premiums and work in progress costs.