Trade credit insurance claim payouts reach £5 million a week as the number of claims increased by 60% in the last year, according to new figures released (on 22nd March 2019) by the Association of British Insurers (ABI). Insurance often gets a bad press for trying to dodge claim payments, but these figures highlight the support that trade credit insurance has provided to help firms during the difficult trading climate over the last year. These figures show an increase in claim payments of almost £1 million per week in comparison to last year.
- The value of claims paid by trade credit insurers was £251 million, which is an increase of 12% from 2017 and the highest level since 2009.
- The number of credit insurance claims paid was 17,500, which is an increase of 60% from 2017 and equates to 50 firms helped per day.
- The number of business supported by a trade credit insurance policy is nearly 14,000, which is the highest number of credit insurance policies since 2008.
Continued Brexit uncertainty, a weaker pound, rising business rates, competition from online sales and weaker consumer spending all contributed to the challenging trading climate in 2018 and we saw many high profile business failures as a result. Some of these included Palmer and Harvey, where trade credit insurance claim payouts reached £30 million to support suppliers; Maplin, where credit insurance claims reached £11 million; and Toys R’ Us, with credit insurers paying out nearly £3 million.
Mark Shepherd, the ABI’s Assistant Director and Head of General Insurance Policy commented: “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.”
Acumen Credit Insurance Brokers are specialist trade credit insurance brokers and are able to ensure that you have the most suitable policy for your business that will maximise the support that a credit insurance policy can provide. We also assist with all claim submissions and payment negotiations so you can be can be sure that you will receive the maximum claim payment available. As noted in our most recent Risk Round Up, we have seen the number of CVAs utilised by firms increase over the last year too and any form of insolvency proceedings will trigger the claim process including CVA, administration, liquidation and chapter 11.
For more information, see our What is Trade Credit Insurance page.
Why not contact us for a credit insurance quote or to see whether your current arrangements can be improved?