Tony Sullman, the founder and chairman of Claims Direct, has effectively quit the company after it issued a profits warning to the London Stock Exchange this week, blaming adverse publicity for a sharp decline in business.
Sullman becomes non-executive chairman until a replacement is found for him. Legal director and company secretary Paul Rew has also left.
Claims Direct, the UK's biggest personal injury no win no fee claims farmer, has seen the number of new cases on its books halve since it was attacked for offering consumers a raw deal by two big media hitters – Anne Robinson on BBC1's Watchdog and the Sun newspaper.
The criticism centred on the company charging high premiums, sometimes for very low payouts.
After peaking at accepting 5,000 new cases in November, the numbers dramatically dropped to only 2,411 cases in December.
The January figures look a little better.
Claims Direct's share price was trading at a lowly 36p at the time of Insurance Times going to press, a far cry from the stock market high of 360p in July 2000, which netted Sullman a paper fortune of £100m.
But Sullman and other founding investors did sell £50m of shares, just after the flotation, which was invested offshore.
Part of the stock exchange statement also relates to the delay in introducing a better insurance product, which was announced in a company statement on November 24, 2000.
It has led to the company being unable to recover from its clients the increased premium costs payable to underwriters. Accordingly, gross margins have been significantly reduced during this period.
The company says it anticipates it will have to make advanced payments in order to secure underwriting capacity on a longer-term basis (three years). This will be reflected in the accounts for the full year to March 31, 2001.
Meanwhile David Gravell is appointed to the board as operations director. He was previously the claims director of the commercial division of Zurich Insurance.
Paul Doona, finance director, will now assume the role of company secretary.