According to figures published by the Association of British Insurance (ABI) on 22nd March 2019, insurance pay-outs that provide a lifeline to help businesses struggling to cope with bad debts, are at their highest level since 2009; with the equivalent of 50 new claims made every day.
The figures highlight the support that trade credit insurers are providing to help firms during the challenging trading climate.
- The value of claims paid by trade credit insurers to help businesses due to non-payment of debts were £251 million, the equivalent of £5 million every week. This is up a significant 12% on 2017, and the highest amount since 2009.
- There were 17,500 claims, up 60% on 2017. This equates to over 300 firms being helped every week, or 50 helped every single day.
- The number of trade credit insurance policies is at its highest since 2008, with nearly 14,000 policies supporting British businesses.
With continued Brexit uncertainty, competition from online sales, weaker consumer spending, rising business rates, and increased operating costs due to a weaker pound; all these factors have all contributed to create a very challenging and difficult trading climate.
High profile company failures in 2018 included Carillion and the wholesaler Palmer and Harvey, on which trade credit insurers paid out £30 million to help suppliers; electrical retailer Maplin, on which insurers paid out £11 million and Toys R’ Us, with insurers paying out nearly £3 million. The British Retail Consortium has estimated that 85,000 jobs in the retail sector were lost in 2018.
(Source: ABI; 22/03/2019; www.abi.org.uk/news/news-articles/2019/03/bad-debt-britain---payouts-to-help-uk-firms-survive-unpaid-bills-now-at-their-highest-since-2009/)
Commenting on the figures, Simon Culpeper, Account Director in the Credit Insurance Division at ICB Group, said:
"The figures above demonstrate that we are in a period of extraordinary economic uncertainty. Even without the elephant in the room – Brexit – we have an evolving retail landscape, a volatile construction industry and a raft of other industries going through serious change such as the food and manufacturing sectors.
If you factor in issues surrounding import/export and currency fluctuations then UK Businesses have a host of issues that they have to contend with outside of their control. We are still battling against a lack of awareness that these SME’s can protect themselves and do not have to leave what is often their largest asset, their trade debtors, uninsured.
Despite the claims figures above, credit insurers are still being as commercial as possible and are offering solutions to businesses who do not want their hard work to be wiped out by the possibility of suffering a bad debt.
If you’d like to discuss any of the above, please feel free to contact me directly on my details below."
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