“Invaro is not another TAG”, said Tony Murphy of financial services firm Smith & Williamson, which has been appointed to oversee Invaro's liquidation.
Murphy said: “There will be a liquidation at Invaro. But the business will go forward in some form.
“There is a large volume of claims waiting to go forward, and they will go forward.
“There is a rescue plan in place.”
Murphy said the company had entered into liquidation voluntarily.
IGI Insurance, which had provided some capacity to the claims farmer, said it had no exposure to the collapse.
Marketing director Stuart Craig said there was no direct agency agreement between IGI and Invaro, and that the insurer had ceased underwriting any new policies in March 2004.
Craig said the company had a commitment to After The Event (ATE) policyholders and would honour its commitment to those policies that were still in effect.
IGI managing director Keith Wardell told Insurance Times, 18 September 2003, that the company would provide £6.5m of legal expenses capacity for the claims company.
A large part of Invaro's capacity is believed to have been supplied by Isle of Mann-based Rock Insurance, market sources revealed.
DAS underwriting product and development manager David Haynes said the news was a bad thing for the personal injury market.
“There have been enough failures already and this doesn't help the reputation of the ATE market. It leaves the public thinking that all the companies in the market are the same.”
He said insurers would be further discouraged from providing capacity for the ATE market following the announcement of the liquidation.
But David Faithful of Amery-Parkes solicitors said there would continue to be a place for claims management firms in the UK insurance industry.
He said the form they took would have to change from the TAG model, however.
“There will always be a place for claims management companies, but the way the industry is moving with the introduction of success fees and fixed costs means that the market will be very different in future.”
The news of the liquidation contradicts the results of an Insurance Times opinion poll conducted in September 2003. The results of the poll showed that 74.9% of respondents thought the company would succeed, with only 25.1% of respondents predicting the company would run into difficulties.
