Motor and Legal Group (MLG) has reached an out of court settlement with Hill House Hammond (HHH) over plans to transfer claims administration to its parent company, Norwich Union.
It follows a threatened high court action by MLG which was due to begin on February 21.
The settlement means HHH will maintain its outsourcing contract for claims handling, believed to involve up to 80,000 claims a year, and operate its approved repairer network for a further year.
However, Norwich Union was thought to have already geared up its approved repairer network to deal with the increased number of claims.
A statement from Norwich Union said: "HHH will continue to work with MLG for a further 12 months. They have accepted this arrangement and reached an out of court settlement. There were advantages to both parties to agree to an extension of the contract."