Trade credit insurers paid claims to UK businesses in 2016, amounting to more than £4 million ($4.9 million) a week, or £210 million ($256.8 million), according to figures released by the Association of British Insurers (ABI).
These claims due to non-payment were up just over 40 percent from 2015, reaching the highest amount since 2009, said the ABI.
Other highlights of the ABI’s annual trade credit insurance statistics include:
- The level of trade covered by trade credit insurance in the UK has reached £314 billion ($384 billion), up 6 percent on £295 billion ($360.7 billion) in 2015.
- Payment of gross claims has fluctuated since 2007, with in 2009 of £286 million ($349.7 million), and the lowest figure of £105 million ($128.4 million) recorded in 2014.
- The number of claims notified also peaked in 2016 to its highest level since 2009 at 12,221 claims.
- A fifth of policies last year covered businesses exporting goods or services overseas with just over three-quarters covering domestic trade.
- The share of gross written premiums by distribution channel has remained fairly constant with 93 percent recorded as going through an intermediary and 7 percent going direct in 2016. The ABI said this demonstrates the ongoing importance of the broker in getting the message on trade credit insurance out to the business community.
“Trade credit insurance is an essential tool in enabling businesses to trade safely, both domestically and overseas,” said Trevor Williams, chair of the ABI Trade Credit Committee, and head of Credit and Surety – Europe, QBE Insurance, in a statement.
“Without being able to claim for non-payment, UK businesses would have lost out to the tune of £4 million a week – a significant figure which would have been a direct hit on their bottom line,” he added.
“Businesses, in particular SMEs, are unable to bear the brunt of non-payment, which can have a detrimental impact on their financial health and can also have a negative knock-on effect rippling down the supply chain,” Williams emphasized.
“In a climate of economic uncertainty, businesses are increasingly using trade credit insurance to protect themselves against the risk of non-payment,” he said.
“The fact that insured trade is at a record high is testament to the value businesses are increasingly placing on trade credit insurance, allowing them to trade with a safety net of protection against the evident as well as unexpected risks,” Williams continued.
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 Insurance.
Source: Association of British Insurers
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