Composite Legal Expenses has warned that rival Abbey Legal Protection's decision to cut premiums last week will destablise the market.

Managing director John Mullin said it was irresponsible for Abbey Legal Protection to offer a 50% cut in premiums for employment dispute if the policyholder stops contract cover.

He said: "It can only lead to underwriters getting burnt, which in the long term cannot be justified."

But Abbey Legal Protection said: "The realignment of our premiums reflects the correct price for the product when delivered with professional advice and professional representation, and has been made on empirical underwriting information."