When, last night, I said that I'd try to remain sober enough to answer your question, I forget to specify a deadline before I'd open the wine. I'm rather further into this bottle of cheap South African red than I should be when answering law questions ;-)
However, it seems that the insurance company (or, more precisely, their solicitors) have got a valid point. The purpose of a 'disposal hearing' is to determine the amount to be paid (and the method of payment) when either liability has been admitted or a judgement has been given against the defendant. Since neither has occurred, the court officials appear to have made an administrative error. (If the disposal hearing took place, the solicitors could simply show that they'd never admitted liability, or had a judgement made against their client. That would just delay matters).
They appear to be making a perfectly sensible suggestion, by stating that the matter should be handled by the Small Claims Track. Unless Barmaid posts to the contrary, I can see no reason why you shouldn't sign the consent order. (You won't get any money until the court has given judgement, so it seems to be in your interest to get the matter brought before a court as soon as possible).
Chris