Payments made in 2017 by trade credit insurers to UK businesses for unpaid bills rose to their highest level since the global financial crisis, reports the Association of British Insurers (ABI).
Claims paid to businesses for non-payment of debts totalled £225m last year, a rise of 7% from 2016 and the highest figure since 2009. The ABI reports that there were a total of 11,017 claims in 2017, with an average of 212 firms being helped each week and reflecting increased pressure on supply chains.
In the fourth quarter of 2017 the value of claims received stood at £130m, the highest quarterly figure since early 2009.
The ABI report follows data issued earlier this year showing that a total of 17,243 companies in England and Wales entered insolvency last year, the highest figure since 2013. The most high-profile corporate failures included Monarch Airlines and groceries wholesaler Palmer & Harvey. The 2017 figures do not include the more recent collapse of facilities management group Carillion and retailers Toys R Us and Maplin.
Mark Shepherd, the ABI’s assistant director for property, commercial and specialist lines, said that recent failures highlighted the value of trade credit insurance, which could “make the difference between survival or demise following non-payment by a customer.”
Shepherd added: “The expertise of trade credit insurers is helping firms navigate challenging trading conditions, enabling them to expand at home and overseas, so helping Britain thrive. With the number of policies rising and insured trade at a record high, more firms are recognising that this cover is an essential business tool to help them assess the credit risk of potential business partners.
“But too many firms remain unprotected, and with intermediaries selling the vast majority of these policies, we need to raise awareness of the importance of trade credit insurance.”
The level of UK trade covered by trade credit insurance also rose last year to a record £340bn; a 7% increase on 2016 said the ABI.
Nearly 13,000 policies are in force, of which a fifth cover businesses exporting goods or services overseas, with just over three-quarters covering domestic trade.