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Warning to unprotected firms

Bad debt insurance pay-outs at decade high

Maplin

Maplin was among the high profile failures


Companies have been warned not to leave themselves exposed after alarming new figures showed insurance pay outs to cover unpaid bills are at their highest since 2009.

More than £4 million is paid out to help 200 struggling firms every week with a record £340 billion of UK trade now covered by trade credit insurers, according to the Association of British Insurers (ABI). 

High profile company failures last year included Monarch Airlines, Palmer and Harvey and Misco.

This year has seen the collapse of Carillion, Toys R Us and Maplin. With company insolvencies up 4%in 2017, UK firms continue to face challenging trading conditions at home and abroad. 

Commenting on the figures, Mark Shepherd of the ABI said recent failures highlight the value of trade credit insurance.

“Trade credit insurance can make the difference between survival or demise following non-payment by a customer,” he 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.”

The ABI’s annual trade credit insurance statistics highlight that:

  • Claims paid to businesses due to non-payment of debts in 2017 totalled £225 million, the equivalent of £4.3 million every week. This is up 7% on 2016, and the highest amount since 2009.
  • In 2017 there were 11,017 claims. This equates to 212 firms being helped every week.
  • The level of trade covered by trade credit insurance in the UK stands at a record £340 billion, up 7% on 2016.
  • A fifth of policies covered businesses exporting goods or services overseas, with just over three-quarters covering domestic trade. The trade credit market continues to grow, with nearly 13,000 policies in force.
  • The value of claims received in the last quarter of last year, at £130 million, was the highest quarterly figure since the first quarter, 2009. 

 

 






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