A 'significant' first-half loss was predicted as it announced a deal that it hoped would clear the logjam of court cases. The deal, with Direct Line, one of the top five motor insurers, is for the settlement of all its outstanding credit hire and credit accident repair claims. Helphire expects this to be the catalyst for a rush of settlements with other insurance firms. It has also agreed to charge customers according to figures provided by the Association of British Insurers.
The row was based around a Lords of Appeal ruling on a test case, Dimond-v-Lovell, that indicated many bills sent to insurers by credit hire firms need not be paid.
In a stock exchange statement, Helphire said: 'Trading has continued to be influenced by the legal position following the House of Lords ruling in the case of Dimond-v-Lovell.
'The Board anticipated that this ruling would result in the acceleration of cash flow through the settlement of cases both directly and through the court system. However, this has not happened, partly as a result of the inability of the court system to handle the volume of cases involved.'
Under the new agreement, Direct Line will settle all outstanding claims at a discount, but Helphire will benefit from swift payment of future claims.
David Lindsay, finance director, said: 'You can insist on taking the moral high ground, but eventually commercial reality prevails. We are getting all the bad news out of the way now to ensure the company is profitable going forward.'
Helphire joins a growing list of credit hire companies falling into line to agree to the ABI rates for credit hire. Accident management company Auto Indemnity has already signed an agreement with Direct Line and agreed to operate under ABI terms.