Claims Direct is closing 13 of its 17 franchised shops and stepping up its £20m advertising campaign, in a bid to boost its flagging business.

The company issued its third profits warning last month.

Chief executive Colin Poole said Claims Direct had learned valuable lessons from its year-long franchise operation and needed to restructure its network of high-street shops.

The 13 shops being closed are mainly in London. Ownership of the remaining four is to be transferred to the franchisees.

Despite the closure programme, Poole said the company was still interested in receiving approaches from potential franchisees.

Poole has also taken charge of the company's marketing strategy, including its high-profile advertising campaign. This follows the departure this week of group marketing director Roger Plantier and of founding chairman Tony Sullman in January.

Poole said Plantier had left by mutual consent. “Roger took Claims Direct through one of the most troubled periods of any company floated on the stock market. That would have taken a considerable amount out of anybody,” he said.

Poole signalled a shift in Claims Direct's marketing strategy towards a “multi-media approach”.

Meanwhile, former Zurich commercial director David Gravell, who joined Claims Direct last November, has

been promoted to operations director.

Poole said changes were needed to increase Claims Direct's level of accepted cases from the current 2,500 a month to more than 3,000 to break even.

He also feared that the dispute with liability insurers over the recoverability of after the event (ATE) insurance premiums was unlikely to be settled in the short term.

He rejected the perception that Claims Direct was a middle man “creaming off profits” from insurers as unfair. He said the company was in the position of “piggy in the middle” in the dispute, sandwiched between insurers and the insurance lawyers.

But Poole said the company was only having difficulty obtaining payment in less than 15% of its cases and had resorted to court action in only two cases.

He added Claims Direct would not be able to reduce the size of its £1,250 basic premium until more underwriters entered the ATE legal insurance market. He said some underwriters were reluctant to enter the market because they feared they would suffer serious losses.