That does surprise me. It's the job of the police and the CPS to decide whether there's enough evidence of law-breaking to secure a conviction. It's the solicitors' job to secure compensation. The two are linked, but not the same.
I agree. I think it extremely unlikely that Sussex Police will do anything not least because there is no independent evidence of who was driving the van (14 mates on a cycling trip don't make independent).
The solicitor feels that there is little point arguing against the insurance company as it is unlikely to result in a victory. Now they have two attitudes: we're doing work we're not getting paid for and if we lose we get nothing; if we win we get quite a bit of money compared to the work involved. It appears that the first attitude has become the favoured one. I don't think RJW would leave a case if they thought they could win it.
However all that said, there is a one way link between an insurance claim and a conviction: you can't get a conviction from an insurance claim but a conviction would bolster an insurance claim. So even if all Sussex Police have done is gone round and said "Look you were a naughty boy, don't do it again" that shows that the law believes there is an element of culpability.
I don't think that has happened but will see. I'm down a couple of hundred quid on a new crankset but other than that, unscathed. Live and learn.