ABI publishes statement of principles and advice for business

Association of British Insurers (ABI) figures show trade credit claims have risen by more than half, forcing it to publish a Statement of Principles on Trade Credit Insurance and advice to business.

The statement of principles sets out how trade credit insurers operate and what their clients can expect from them.

It includes:

  • An overview of how risk assessment decisions are made.
  • A commitment to provide, on request, reasons for a decision to stop or substantially reduce credit insurance cover, and to swiftly resolve appeals against decisions.
  • A commitment to work with banks and companies to maximise the potential for UK companies to continue to trade as viable businesses.

The Advice to Businesses on trade credit insurance explains what information insurers expect from their clients and the companies they are trading with.

The latest ABI figures show that in Quarter 4 2008:

  • The number claims rose to 8,366, up from 5,540, an increase of 51%.
  • The value of claims was £360m, up from £257m.
  • The total value of turnover insured increased to £302.5bn, up from £282bn.

Nick Starling, the ABI's Director of General Insurance and Health, said: "Both the Statement of Principles and Advice to Businesses are essential to help correct widespread misunderstandings about trade credit insurance. They reaffirm the important role that insurers have in supporting businesses, especially small and medium-sized enterprises, during these turbulent economic times. Through their risk management processes, trade credit insurers help protect SMEs by warning them of major weaknesses in the companies they supply and by protecting them against unexpected losses.

"The latest rise in trade credit insurance claims, and the value of turnover covered, shows that insurers are playing a crucial role and continue to help their customers through the recession."