There were more insurance claims to cover the non-payment of debts in the first three months of this year than in any other quarter over the last decade, the Association of British Insurers (ABI) has revealed.
The ABI said continued Brexit uncertainty, competition from online sales, rising business rates, lower consumer spending, and a weaker pound were all to blame.
he findings show that there were 5,114 trade credit insurance claims made by UK businesses in the first three months of this year – the highest quarterly level seen since 2009.
The total value of claims paid was £48m, up by £1m compared to the previous quarter, with an average payment of £9,000 made to 57 firms every day.
This comes after the latest government figures revealed a 6% increase in company insolvencies in the first three months of this year.
“The 10-year high in trade credit insurance claims so far this year highlights the vital role trade credit insurers are playing in helping UK firms navigate tough trading times,” ABI assistant director, Mark Shepherd, said.
“While protecting against non-payment is essential, the expertise and support of trade credit insurers is also helping firms to grow and trade with greater confidence, reducing the risk of facing bad debts.”
The latest spike in trade credit insurance claims reflects a trend, with the first quarter of last year also recording the highest number of claims seen for many years.
This coincided with a 13% increase in the number of corporate insolvencies recorded, with the collapse of construction giant Carillion having a far-reaching impact on businesses.
“While the number of firms with this protection is rising, too many firms remain at the mercy of bad debts,” Shepard continued. “We must do more to raise awareness of the importance of trade credit insurance.”