Claims Direct is blaming adverse media coverage for its decision to set aside £5m to cover ex gratia payments made to up to 10,000 claimants. The personal injury claims company was savaged by Ann Robinson last month on BBC's Watchdog.

This week, Claims Direct said it has had to respond to concerns that claimants taking out a policy before April 1, 2000 have been unable to fully recover their insurance premiums from defendants.

Colin Poole, Claims Direct chief executive, said he believed its decision to compensate affected up to 10,000 claimants would “end damaging media comment” over clients who bought its after-the-event insurance before April 1, 2000.

Claimants who took out a policy after April 1, 2000 have been able to recover their insurance premiums from losing parties including defendant insurers following a rule change issued by the Lord Chancellor.

Claims Direct earlier set aside £1m to compensate claimants in its interim results in September, but has had to increase the sum to £5m to ensure no claimant is worse off than under its previous percentage fee arrangement.

It expects the £5m will adequately cover all future ex gratia payments relating to the recoverability issue.

Claims Direct published its first full year results yesterday, Wednesday, after Insurance Times went to press. Its share price was 120p on Tuesday, down from a 12 month high of 349p.