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Trade credit insurance keeps supply chain moving Insurers covered goods Phones4U administration

Trade credit insurers provide companies supplying goods on credit to other businesses with insurance to cover the value of the goods being supplied should the company they are supplying go bankrupt.

When Phones4U made the unexpected announcement that they had called in the administrators, trade credit insurers provided cover worth up to £25.7 million for goods supplied to the phone company. 

The total amount of insured goods in the supply chain at the time of administration was £14.5 million, this is the value of the claims insurers expect to receive and pay out on. Many of the companies supplying to Phones4U are SMEs, trade credit insurance provides them with a lifeline and peace of mind to trade without taking all the risk themselves.

Without trade credit insurance in place to insure their trading many more businesses could also now be facing administration as a consequence of Phones4U defaulting on their payments.

Huw Evans, Deputy Director General of the Association of British Insurers, said:

"Trade credit insurers keep Britain’s supply chain moving and enable their customers to do business with much greater security than they would have if they were on their own. 

"The all too real example of Phones4U going into administration shows exactly the reason why so many businesses rely on trade credit insurance to insure the value of goods they are supplying.

"Trade credit insurance provides the function that enables companies to take calculated risks and the British economy to grow and operate effectively."

Last updated 01/07/2016