Claim against me - June 2011

In Jan 2009 I was involved in a very minor rta. Traffic was stationary on the M61, with the flow stopping and starting at less than 10 mph. I released my clutch and collided with the vehicle in front that was stationary.
My fault.
We both got out and inspected our vehicles for any damage, we agreed that my number plate was broken and there was no damage to her car, exchanged pleasantries, details and went our merry ways. A few weeks later I received a letter from my insurers, those with the red phone, who explained that a claim had been lodged and requested details, which I supplied as above. I was offered the opportunity to settle directly myself if as anticipated the other party's damage was minimal or Â?nil and the matter was closed. I requested to be kept informed in the unlikely event of any developments affecting my policy and protected NCD.
I today receive a phone call informing me that they had accepted a claim of Â?1,000 from her insurers for damage to her vehicle, plus a hire car cost and a personal injury claim.
This is first I had heard about this matter since January 2009, I assumed it had all gone away.
Anyone any suggestions what action I may be able to take to defend my position, both from the extent of the damages of the other party and also against my insurer who have accepted liability, and not allowed me the opportunity the challengs and settle the damages, plus not keeping me informed of this matter?
Whilst it may provide me with a degree of comfort if anyone wished to sympathise with me concerning the state of our society whereby there are opportunists looking to exploit the system for personal gain to such an extent, no reply is necessary.