The AA, Saga and Direct Choice Insurance, which are all owned by Acromas Holdings, have brought their credit hire business in house.

As a result, it has stopped referring any business to Helphire, which was the sole replacement vehicle credit hire supplier to Acromas’s customers involved in non-fault crashes.

Between them Acromas’s three insurance companies, which cover 2.7 million British drivers, provided 22% of Helphire's referral business and 11% of its turnover.

The decision to bring the credit hire business in house was based on the financial advantages such a move would bring, Acromas communications manager, Paul Green told Fleet News.

“We are bringing all this in-house so we can control the customer experience right through, but the decision was always looking at the cost advantages,” he said.

Some 100 people have already been employed to manage the thousands of replacement vehicles that will be required every year from the new operation, called Claim Fast.

However, unlike Helphire’s business model, Acromas’s new operation will not run a fleet of vehicles but will instead hire in cars as and when they are needed.

Its preferred rental supplier is Enterprise Rent-a-Car, although Green said other short-term rental companies will be used.

“This is a reasonable sized operation, that will manage all of the administration of a credit hire business,” said Green.

“But we are not creating a fleet.”

He stressed Claim Fast has been created to “satisfy our own business needs” but did not rule out taking on the credit hire needs of other insurance companies.

If Acromas’ move proves successful, other insurers may either switch to using its new service or may create their own in-house operations, which will further add to Helphire’s woes.

The credit hire company this week also confirmed that it has abandoned the development of an in-house single IT platform.

The company has been developing the platform – called Expedite – for five years.

Now it said there are alternative solutions already operating within the company “which provide significant cost and functionality benefits over Expedite”.

Therefore it has abandoned the project, which has cost approximately £12m to date to develop.

It is also making 55 staff redundant.

On a more positive front, Helphire also announced that it has agreed contract renewal terms with one of its largest referrers to supply non-fault accident and related services for a further two years.

"Additionally, we have recently signed a renewal agreement with another significant account to supply our non-fault services for a further three years on an exclusive basis," said Helphire in a shareholder statement issued this morning.

"Together, these accounts represent 30% of current case hire volumes."