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ABI publishes trade credit insurance Statement of Principles

The ABI (Association of British Insurers) has published a new Statement of Principles on Trade Credit Insurance, which sets out how trade credit insurers operate and what their clients can expect from them. The Statement of Principles includes:

  • An overview of how risk assessment decisions are made.
  • A commitment to provide, on request, reasons for a decision to stop or substantially reduce credit insurance cover, and to swiftly resolve appeals against decisions.
  • A commitment to work with banks and companies to maximise the potential for UK companies to continue to trade as viable businesses.

Latest ABI figures show that in Quarter 4 2008, the number of trade credit insurance claims rose to 8,366, up from 5,540 in Quarter 4 2007 - an increase of 51%. The value of claims incurred in 2008 was £360m, up from £257m in 2007. Meanwhile, the total value of turnover insured increased to £302.5bn in 2008, up from £282bn in 2007. This demonstrates the commitment of trade credit insurers to support their clients when trading is difficult, by providing them with as much cover as possible and carefully monitoring their risks.

The ABI has also published Advice to Businesses on trade credit insurance, which explains what information insurers expect from their clients and the companies they are trading with, an especially important factor when trading conditions are difficult.

Nick Starling, the ABI's Director of General Insurance and Health, said:

"Both the Statement of Principles and Advice to Businesses are essential to help correct widespread misunderstandings about trade credit insurance. They reaffirm the important role that insurers have in supporting businesses, especially small and medium-sized enterprises, during these turbulent economic times. Through their risk management processes, trade credit insurers help protect SMEs by warning them of major weaknesses in the companies they supply and by protecting them against unexpected losses.

"The latest rise in trade credit insurance claims, and the value of turnover covered, shows that insurers are playing a crucial role and continue to help their customers through the recession."

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Last updated 01/07/2016