The ABI estimates Carillion trade credit insurance payouts at £31m, but that is a fraction of the losses expected.
An estimated £31m is expected to be paid by trade credit insurers to help firms in the supply chain recover from the collapse of Carillion, according to estimates from the ABI.
But that is a fraction of the total losses suppliers and contractors will suffer.
According to Carillion’s own figures from a year ago, the company said it owed £750m in trade payables, with a similar amount owed to other trade creditors, excluding banks and pensioners. That total is likely to have been higher at the time of the company’s collapse last week, when analysts estimated Carillion’d debt at £1.5bn.
Last week, trade credit insurer Acumen said credit insurers would feel a ”significant impact” as a result of the Carillion liquidation, and warned of a domino effect, as firms hit by Carillion’s collapse fall into financial difficulties themselves.
Latest figures show that, in 2016, trade credit insurers paid out a total of £210 million to businesses due to non-payment.
Mark Shepherd, assistant director, head of Property, Commercial and Specialist Lines at the ABI said:
“The demise of Carillion is a powerful reminder of how trade credit insurance can be a lifeline for businesses in these uncertain trading times. This insurance is an essential business tool that helps firms trade and expand in the UK and overseas. For all businesses, large or small, bad debt could easily put their day-to-day operations at risk, threatening the jobs of their employees. One insolvency can risk a domino effect to hundreds of firms in the supply chain. Trade credit insurance is an essential resource that provides businesses with the confidence to trade, secure in the knowledge they are financially protected when insolvencies occur.”