The Association of British Insurers (ABI) estimates £31 million is expected to be paid by trade credit insurers to help firms in the supply chain recover from the collapse of Carillion (see full article here).
Trade credit insurance covers firms against the risk of not being paid for goods or services that they provide, following an insolvency, protracted default or political upheaval. Latest figures show that, in 2016, trade credit insurers paid out £210 million to businesses due to non-payment.
Carillion is the latest in a number of high profile company collapses such as Monarch, Palmer & Harvey, Multiyork and Misco.
Mark Shepherd, Assistant Director, Head of Property, Commercial and Specialist Lines, at the Association of British Insurers, said:
“The demise of Carillion is a powerful reminder of how trade credit insurance can be a lifeline for businesses in these uncertain trading times. This insurance is an essential business tool that helps firms trade and expand in the UK and overseas. For all businesses, large or small, bad debt could easily put their day-to-day operations at risk, threatening the jobs of their employees. One insolvency can risk a domino effect to hundreds of firms in the supply chain. Trade credit insurance is an essential resource that provides businesses with the confidence to trade, secure in the knowledge they are financially protected when insolvencies occur."
Trade credit insurance gives businesses the confidence to extend credit to new customers and can improve access to bank funding, often at more competitive rates. The ABI's website contains useful background on the topic, including details of how trade credit insurance works - see here for more information.
Please speak to your contact at Marlows to find out more, or get in touch using our website contact form.