New figures from the ABI show that trade credit insurers are providing more cover to UK businesses than ever before, insuring turnover worth £315 billion in 2014 – a 6.6% increase in turnover insured from the previous year.

However, the average premium for a trade credit insurance policy has fallen by more than 2% over the same period. The ABI says trade credit insurance promotes financial growth by giving businesses the confidence to extend credit to companies they are trading with.

Last year, businesses took out almost 10,600 trade credit insurance policies to protect themselves against the financial distress of a trading partner. While turnover insured was higher in 2014, businesses made over 10,300 claims on their insurance, a 1.9% decrease from the previous year. This reflects improvements in the UK economy, with total company insolvencies in England at the lowest level since 2007 according to figures from The Insolvency Service.

Trade credit insurance is also a valuable tool in facilitating international trade by helping businesses to manage increased risks that come with exporting. Total trade exports have increased by 4% since last year.

Trade credit insurance plays a particularly important role for small businesses who are less able to cope with the impact of customer insolvency, and in addition can assist them with obtaining finance, as well as protecting them as they grow. In 2014, small businesses made more than 3,900 claims, accounting for 38% of the total claims made to trade credit insurers.

Mark Shepherd, manager for General Insurance Policy at the ABI, said: "Trade credit insurers are covering a record £315 billion worth of turnover for UK businesses, protecting them against the financial risks of trading. As the UK economy improves, trade credit insurance provides reassurance and encourages businesses to expand, supporting sustainable growth."

He added that trade credit insurance is particularly valuable for small businesses that are looking to grow by protecting their supply of goods and services on credit to their trading partners. "This insurance can improve access to finance, and credit insurers work with their customers to help them understand and manage their risk when trading with other firms."

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