Government 'must act now' over credit insurance crisis

PROBLEMS with trade credit insurance are having an adverse effect on almost half of all businesses, new figures have revealed.

Half of large retailers and more than 40 per cent of small and medium-sized ones say the reduction or withdrawal of the insurance is undermining their ability to trade, according to the British Retail Consortium's (BRC) Credit Conditions Survey.

The BRC is now calling on the UK government to provide top-up insurance cover to give a boost to firms suffering from the withdrawal of insurance.

Trade insurance is taken out to cover a supplier against a customer going bust – but insurance companies withdraw cover if they are uncertain of the financial viability of the customer. The withdrawal of insurance can mean suppliers demand to be paid upfront or refuse to supply the company.

But nine out of ten SME respondents and two-thirds of larger retailers believe that trade credit insurers are not in a position to assess accurately the risk of a supplier not getting paid.

Stephen Robertson, director general of the BRC, said: "In these uncertain times, it's even more important suppliers have the confidence that trade credit insurance brings. Cover must remain available."