Insurance payouts that provide a lifeline to help businesses struggling to cope with bad debts are at their highest level since 2009, with the equivalent of 50 new claims made every day, according to new figures from the Association of British Insurers.
The figures reveal that 2018 saw the value of claims paid by trade credit insurers to help businesses due to non-payment of debts reach £251 million, the equivalent of £5 million every week. This is an increase of 12% on the previous year, and the highest amount since 2009.
There were 17,500 claims, up 60% on 2017 and the number of trade credit insurance policies is at its highest since 2008, with nearly 14,000 policies supporting British businesses. Businesses are wary of potential bad debt risks for a number of reasons. Ongoing Brexit uncertainty, competition from online sales, weaker consumer spending, rising business rates, and increased operating costs due to a weaker pound have all contributed to create a difficult trading climate.
High profile company failures in 2018 included Carillion, wholesaler Palmer and Harvey - on which trade credit insurers paid out £30m to help suppliers, electrical retailer Maplin, for which insurers paid out £11m, and Toys R’ Us, with insurers paying out nearly £3m. Mark Shepherd, ABI assistant director, head of general insurance policy, said: “Trade credit insurers are helping many UK firms through tough times. Uncertainty around Brexit is only adding to the challenges faced by many firms. Despite this, trade credit insurers continue to support businesses, with their risk appetite remaining high, even in the volatile economic climate.
“While protecting against non-payment is essential, the expertise and support of trade credit insurers is also helping firms to grow and trade with greater confidence, reducing the risk of facing bad debts. Having this cover can also improve access to funding from banks and other financial institutions. While the number of firms with this protection is rising, too many firms remain at the mercy of bad debts, so we must do more to raise awareness of the importance of trade credit insurance.”
Printed Copy:
Would you also like to receive CIR Magazine in print?
Data Use:
We will also send you our free daily email newsletters and other relevant communications, which you can opt out of at any time. Thank you.
YOU MIGHT ALSO LIKE