Reinsurance rises as insurers refuse cover to fit firms
Credit insurers have been accused of pulling cover from healthy businesses pushing them towards collapse.
The Financial Times reports that the Institute for Turnaround say credit insurers are cutting cover across whole sectors rather than examining the risk of each individual company. This is making business “doubly difficult” for the companies hit. The reports stem from a survey of institute members involved in significant turnarounds.
Christine Elliott, in an interview with the FT, is quoted as accusing the credit insurers of “blanket sector reduction sin cover” and “withdrawal without regard to individual operations.”
The FT quotes Xavier Denecker, managing director of Coface UK and Ireland rebutting the allegations. “We have become more sophisticated than using those models,” he said.
Credit insurer loss rations have risen to 70%, the report says.
The FT also reported that several large industrial firms are having to provide credit or offer to buy their suppliers who are unable to get credit from banks and credit cover from insurers.
The Times reported more retailers hit by the withdrawal of credit insurance. It said fashion chain Whistles had had cover cut because it was part owned by one of the collapsed Icelandic banks, which also provided its loans.
The Independent on Sunday claimed credit insurers were facing huge rises in reinsurance premiums. It quoted an anonymous Lloyd’s broker saying: "I guess it's not really a surprise that they will have to pay up in this environment, but the kind of rises being mooted are much higher than we'd imagined. I think there'll be a lot of people in the wider economy who think they are getting their just desserts, given that they have pulled coverage on so many companies recently."
