- Why Are Trade Credit Insurance Claims Surging?
Why Are Trade Credit Insurance Claims Surging?
What is Trade Credit Insurance?
Trade Credit Insurance provides your business with protection against the failure of your customers to pay their debts and the potential delays that can occur in receiving payments from your customers. Not receiving customers’ payments on time, or at all, could be fatal for your business, but Trade Credit Insurance helps transfer that risk. Policies typically cover around 90% of customers’ outstanding debts, which means that the failure of one large customer or multiple small ones will not overwhelm your organisation.
Current Trade Credit Claims Statistics
According to a recent report from The Institute and Faculty of Actuaries, Trade Credit Insurance claims have hit a 10-year high. There were more insurance claims to cover non-payment of debts in the first quarter of 2019 than in any other first quarter of the past decade.
Statistics from the Institute and Faculty of Actuaries show that there were 5,114 Trade Credit Insurance claims in Q1 of 2019 with the value of claims totaling £48m. This volume averages to claim payment of £9,000 made to 57 companies every day!
What Does This Mean for the UK Economy?
Government figures show that company insolvencies have increased by 6% in Q1 of 2019, with corporate insolvencies up 13%. The Association of British Insurers have stated “continued Brexit uncertainty, competition from online sales, rising business rates, lower consumer spending, and a weaker pound were all to blame”.
This all paints rather a bleak picture for the UK economy, with signs of an impending recession. In light of the increase in Trade Credit claims, it’s worth highlighting the importance of Trade Credit Insurance. Trade Credit Insurance offers much-needed protection to businesses in these increasingly challenging times, which the true value can only be demonstrated by observing the sheer volume of claims. Get in touch with our expert Sureties & Specialist Risks team to discuss how a Trade Credit policy can help your business. Call the team now on 02476 017646, lines are open Mon-Fri 9am-5pm.