Zurich has slashed its approved repairer network by a third, leaving more than a hundred bodyshops "high and dry" and demanding compensation.
Approved repairers learned of the insurer's cuts on Monday, when they received a letter announcing Zurich Financial Services would be axing 140 bodyshops from its 370-strong network in 60 days' time.
Zurich had only set up the network last year, promising repairers who joined a three-year work contract.
To soften the blow, the insurer said axed repairers would be invited to become "secondary repairers" to handle overflow from its core bodyshops during peak periods. This could lead to their eventual re-instatement to the ZFS network.
Charles Long, Zurich motor engineering network manager, ruled out compensation saying it had done as much as it could.
He added that repairer trade bodies had been consulted on the move.
Bob Hood, director of bodyshops services division of the Retail Motor Industry Federation, said he had written to Charles Long, demanding his 50 affected members were compensated.
He said: "We hold Zurich morally responsible for what has happened. It led repairers to believe they could expect three years' work and then left them high and dry."
He said compensation was needed since Zurich had asked some bodyshops to invest £5,000 in the Motex estimating system as a condition of joining.
Hood said Zurich had been forced to make the cuts after over-estimating the amount of work available to repairers.
He said: "The predicted number of repairer jobs was vastly over-stated by Zurich. They predicted around 400,000 jobs, but last year generated only 140,000."