Nearly £150m was paid out to businesses in insurance claims for customer insolvency or late payment last year, an increase of 42%. The new figures published by the Association of British Insurers today reflect growing economic uncertainty and are in line with claims from 2007.
The latest annual ABI figures for trade credit insurance, which provides cover for businesses if customers that owe money do not pay their debts or pay late, also shows that 11,000 claims were made by businesses in 2015, an increase of 19% on the previous year.
While total company insolvencies in the UK are at their lowest level since 1989, UK businesses continue to face risks with economic volatility in many export markets, and subdued UK growth across the manufacturing, construction and services sector (see Notes to Eds.).
ABI figures show:
- £149m paid out to businesses, the equivalent of £3m a week, to support them when a trading partner did not pay them money owed.
- 11,000 claims were made by businesses on trade credit insurance policies.
- 74% of policies cover businesses trading domestically, 22% of policies cover businesses exporting goods abroad.
- More than 11,900 policies were sold by trade credit insurers.
Trade credit insurance remains an invaluable tool for UK businesses in facilitating international trade, with the proportion of export polices rising to 22% in 2015, as companies of all sizes recognise how trade credit insurance can help manage the financial risks that can come with exporting.
Mark Shepherd, ABI General Insurance Policy Manager, said:
"Economic uncertainty appears to be causing firms to claim on their insurance if one of their customers pays late, or not at all. Trade credit insurance provides vital support to help businesses trade with peace of mind. Last year, insurers paid out £149m to businesses owed money by their customers, allowing them to continue to operate in uncertain times.
"Trade credit insurance is crucial for all types of businesses, both large and small, and to the UK economy has a whole."