Car insurance claim-what next?

Will keep it brief, i was involved in a car accident last december when a guy ran into the back of me. He admitted liability at the scene, we exchanged details and as i was experiencing some discomfort in my back i attended hospital. I put in my claim as normal and my car was taken away for repair and i had a courtesy car whilst it was for which i had to pay the excess of £700.
Now some 3 months later i have had contact from my own insurance co. to say that the third party is denying any collision took place at all. As there were no witnesses they are saying that it is a difficult situation. All they have is the hospital reports to say i attended, they are waiting on photos and reports from the repairers and the hand written details the guy gave me at the scene. I have already asked the insurance co. to ask why he would give details at the scene if no accident occurred. I am in a bit of a pickle now especially as i had to fork out £700 to get my car back and am worried they wont resolve this and i will end up with a big legal bill. I am tempted to go round and see the guy but dont want to be accused of harrasment. Anyone know what the usual outcome is to situations like this or what i should possibly do next???