Trade Credit Insurance Payout Hits Quarterly High
Trade credit insurance payout is at an all-time high. According to the Association of British Insurers (ABI), the second quarter payout of one million pounds daily ($1.3 million) to help cover bad debts is a quarterly record. A total of 92 million pounds was paid to U.K. firms to combat bad debt, also a quarterly record, surpassing the previous mark of 89 million pounds in 2009's third quarter. ABI has collected this data since 2007.
The second quarter also saw more than 3,600 claims, in large part due to the collapse of construction giant Carillion. Like any insurance, trade credit insurance is available to help those affected by loss. "Trade credit insurers continue to help thousands of firms navigate some hazardous and unpredictable trading conditions," said Mark Shepherd, assistant director, head of property, commercial and specialist lines with ABI, in the release.
He went on to say Carillion's downfall has impacted supply chains as well as both suppliers and insurers. "Never has the importance of trade credit insurance been greater—the survival of any business could be at risk without it," he added. However, there is a large gap in coverage despite the 13,000 policies, resulting in firms taking on nonpayment risks among other threats.
Closing the coverage gap should be "an essential part of every businesses' contingency plan," Shepherd concluded.
-Michael Miller, managing editor