UK businesses are in the midst of the most challenging trading environment since 2008’s financial crisis. That’s the claim of the Association of British Insurers (ABI).
According to statistics published by the ABI, a record amount of UK trade is presently being covered by credit insurers. The figure stands at £340 billion, with more than £4 million being paid out each week. That is the highest level since the immediate aftermath of the financial crisis in 2009.
Credit insurance is generally used by suppliers. It protects against customers who purchase goods but do not pay on delivery. The figures reveal that this was a rising problem in 2017, with claims paying out for non-payment of a debt totalling £225 million. That was an increase of seven per cent on the previous year and equivalent to £4.3 million paid out every week.
The collapse of several large organisations during the latter half of 2017 has been pointed to as a contributory factor in the high level of claims.
Assistant director of the ABI, Mark Shepherd, said: “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.
“The expertise of trade credit insurers is helping firms navigate challenging trading conditions, enabling them to expand at home and overseas, 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.”