Two thirds of claims management companies will exit the market when regulation takes force, the Claims Standards Council (CSC) has predicted.
The CSC membership tally has dropped dramatically from 193 to 90 in the past two months. Despite this there has been a "significant" number of CMCs looking for business in recent weeks, according to the CSC.
"There has been an upsurge in the market in the past few weeks," said Andy Wigmore, policy adviser to the CSC. "We have seen a lot more advertising, cold calling and people out on the street."
But those companies quitting the CSC are described as the "one or two-man bands that cause problems for the market".
Wigmore predicted that up to 50 CMCs would be left in the regulated market.
Meanwhile, Trading Standards, the Inland Revenue and the Serious Fraud Office are investigating six CSC members.
The claims farmers, based in Sheffield, Wigan and Portsmouth, have been under investigation for the past year. The CSC said it had assisted the authorities with their inquiries.
Further public complaints are expected by the CSC when it launches its website at the end of May. The website will give the public the opportunity to blow the whistle on rogue CMCs.