NIG's special risks division may be forced into run-off if a buyer cannot be found, industry sources fear.

It is understood that a large proportion of NIG's special risks capacity was carried by failed claims manager The Accident Group (TAG).

NIG is among a number of insurers, including Catlin, Allianz Cornhill, Atrium and GoshawK, known to have large exposures to TAG.

"It has been a poor performer for some time and its exposure to TAG hasn't helped the situation," one legal expenses source said of NIG special risks. "They have been putting it around the market, but to date there have been no takers."

An NIG spokesman declined to comment, but the source said that if NIG failed to find a buyer for the division it was considering putting it into run-off.

The fall-out from TAG has hit NIG particularly hard. In July, Insurance Times reported that special risks underwriter Mike Rapley had left and NIG had put all future legal expenses business under review. Sources said NIG took an aggressive approach to underwriting TAG business, charging low premiums offset by large excesses for high-risk cases. "In some circumstances they were asking for excesses of £2,500," one source said. "Trouble is, after TAG went bust these were unrecoverable."

TAG, which was founded by entrepreneur Mark Langford, owes its preferred creditors £14.4m, but with only £1.1m available to pay all creditors, unsecured creditors, such as its insurers, are unlikely to receive anything. However, the plans of several insurers contemplating legal action against TAG have been given a boost with a report by actuary B&W Deloitte backing up claims that TAG's vetting procedures failed to weed out fraudulent claims or those likely to fail. The report found that about half of TAG's cases were without substance.

Meanwhile, Cheshire-based company Call 24-7 has been appointed to handle the run-off for TAG.

Business development manager Ian Parratt said that the company, whose core business was processing accident claims for insurers, would handle 250,000 outstanding TAG cases. "It looks like about three years' work," Parratt said.

Call 24-7 was appointed by the insurers and banks owed money by TAG. Parratt said it had hired about 50 former TAG legal staff in order to help it assess the claims.