Trade credit insurers are expected to pay an estimated £31 million to help businesses in the supply train recover from the collapse of Carillion, the Association of British Insurers (ABI) has said.
Firms at risk of not being paid for goods or services that they provide following an insolvency can obtain trade credit insurance coverage to mitigate against it. In 2016, trade credit insurers paid out £210 million to businesses due to non-payment, according to the ABI.
Carillion is the latest in a number of high profile company collapses such as Monarch, Palmer & Harvey, Multiyork and Misco.
Mark Shepherd, assistant director and head of property, commercial and specialist lines at the ABI, said: “The demise of Carillion is a powerful reminder of how trade credit insurance can be a lifeline for businesses in these uncertain trading times.”
“This insurance is an essential business tool that helps firms trade and expand in the UK and overseas. For all businesses, large or small, bad debt could easily put their day-to-day operations at risk, threatening the jobs of their employees.”
“One insolvency can risk a domino effect to hundreds of firms in the supply chain. Trade credit insurance is an essential resource that provides businesses with the confidence to trade, secure in the knowledge they are financially protected when insolvencies occur.”
Outsourcing company Carillion went bust on 15 January, reportedly with just £29 million in reserve.
The company had 57 construction projects construction projects worth £5.7 billion at the time of its liquidation, according to intelligence firm Barbour ABI.