Bad debt Britain: Credit insurer claims hit highest level since the financial crisis
Credit insurers are being hit with the highest level of bad debt claims for nine years, a clear indication UK businesses are facing the most challenging trading environment since the financial crisis.
More than £4m is being paid out each week, the most since 2009, according to figures released today by the Association of British Insurers (ABI).
A record £340bn of UK trade is currently covered by credit insurers.
“The failure of a number of high profile businesses, such as Monarch Airlines and Palmer and Harvey in 2017 and the recent collapse of Carillion, dramatically highlights the value of trade credit insurance,” said ABI assistant director Mark Shepherd.
Read more: Trouble in store for House of Fraser as credit insurer pulls cover
Credit insurance is most commonly used by suppliers to protect against the failure of customers that have bought goods but have not paid for them upon the point of delivery.
Claims paid to businesses due to non-payment of debts in 2017 totalled £225m, the equivalent of £4.3m a week, up seven per cent on 2016.
The ABI said a number of high profile insolvencies in the second half of 2017 meant the value of claims received in the last quarter of the year, some £130m, was the highest quarterly figure since the first three months of 2009.
Shepherd said: “The expertise of trade credit insurers is helping firms navigate challenging trading conditions, enabling them to expand at home and overseas, so helping Britain thrive. With the number of policies rising and insured trade at a record high, more firms are recognising that this cover is an essential business tool to help them assess the credit risk of potential business partners.
But too many firms remain unprotected, and with intermediaries selling the vast majority of these policies, we need to raise awareness of the importance of trade credit insurance.
Read more: Trade credit insurers pull cover as Carillion “hangs by a thread”