The ABI has warned that UK businesses are not doing enough to protect themselves from the risk of supply chain insolvencies.

Figures released by the Department of Trade and Industry show that compared to the third quarter, company insolvencies fell by 1.9% in the last quarter of 2003.

But chairman of the ABI's trade credit committee, Simon Marshall, said that despite the drop, UK businesses remain highly exposed as only 2% had credit insurance to protect themselves against this risk.

Marshall said that while larger businesses were more aware of the risks, "about 10,000 small businesses a year go bust as a direct result of insolvency or by late or non-payment by their suppliers or customers".

He said that because small businesses tend to do business with a small number of companies, they had more vulnerable supply chains than larger companies.

Marshall said that while most credit insurance was sold by specialist brokers or the nationals, regional brokers could sell more credit insurance by promoting it as a risk management tool.

He said that this was because credit insurers could offer a range of credit management services aside from insurance.

He said these included services such as debt collection and assessing the credit worthiness of potential customers.