A record £1 million was paid out every day during the second quarter of the year to help firms cope with the non-payment of bad debts, according to the Association of British Insurers (ABI).
Payouts from trade credit insurance policies largely went to firms claiming in the aftermath of Carillon’s collapse in January.
In the second quarter of 2018, trade credit insurers paid £92 million to help UK domestic firms cope with bad debts. This is the highest quarterly figure since the ABI started collecting this data in 2007.
The previous quarterly high for UK debt pay outs was £89 million in the third quarter of 2009.
Trade credit insurers also received 3,639 claims, the ABI reported, which was down slightly on the first quarter, but otherwise at their highest quarterly level since the third quarter of 2009.
Mark Shepherd, head of property, commercial and specialist lines at the ABI, said: “Trade credit insurers continue to help thousands of firms navigate some hazardous and unpredictable trading conditions, covering a record £340 billion of trade.”
“The ripple effect of high-profile insolvencies like Carillion can have a devastating impact throughout the supply chain, impacting on thousands of firms, with potentially disastrous effects for some.The commercial environment remains a challenging one for customers, suppliers and insurers.
Shepherd added: “Never has the importance of trade credit insurance been greater—the survival of any business could be at risk without it. Yet with 13,000 policies in force there remains a significant protection gap with too many firms operating at the mercy of non-payment of debts.”
“This gap needs to be closed. Insurance intermediaries have a core role to play in encouraging greater take up of this cover as an essential part of every businesses’ contingency planning”.
The ABI UK Trade Credit Data Report compiles data from trade credit insurers AIG, Atradius, Coface, Euler Hermes, Markel International, QBE, Tokio Marine HCC, XL and Zurich.