The Carillion effect: trade credit insurers pay out a record £1m a day to help UK firms stay afloat
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A record £1 million was paid out every day during the second quarter of the year to help firms cope with the non-payment of bad debts, largely reflecting claims from many of the firms affected by the collapse of the construction firm Carillion.
Figures published by the Association of British Insurers (ABI) revealed that trade credit insurers in the second quarter:
Mark Shepherd, ABI’s assistant director, head of property, commercial and specialist lines, said: “Trade credit insurers continue to help thousands of firms navigate some hazardous and unpredictable trading conditions, covering a record £340 billion of trade. The ripple effect of high-profile insolvencies like Carillion can have a devastating impact throughout the supply chain, impacting on thousands of firms, with potentially disastrous effects for some. The commercial environment remains a challenging one for customers, suppliers and insurers.
“Never has the importance of trade credit insurance been greater – the survival of any business could be at risk without it. Yet with 13,000 policies in force there remains a significant protection gap with too many firms operating at the mercy of non-payment of debts. This gap needs to be closed. Insurance intermediaries have a core role to play in encouraging greater take up of this cover as an essential part of every businesses’ contingency planning.”
The ABI UK Trade Credit Data Report compiles data from nine trade credit insurers: AIG, Atradius, Coface, Euler Hermes, Markel International, QBE, Tokio Marine HCC, XL and Zurich.
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