Euler Hermes faces another mauling in the press for pulling cover on Thomas Cook. The real story is not so black and white
Euler Hermes is in the firing line yet again with the national media. This time the insinuation is that, by pulling parts of its trade credit cover on travel firm Thomas Cook, it is precipitating the company’s downfall.
When Euler Hermes chief executive Fabrice Desnos was interviewed by Insurance Times two years ago, he was aghast at suggestions that trade credit insurers trigger insolvencies.
“The biggest frustration is to read that we have precipitated company failures when we are actually insuring against them. So how on earth could we have any interest in bringing about the very event we insure against?” he asked.
“If you were to translate that to any other class of insurance, you would not think of an insurer deliberately putting cars against a wall or lighting fires.”
The real story
It’s hard not to agree with Desnos. The fact is that Thomas Cook, with three profit warnings last year, is not in great shape.
Euler Hermes is simply protecting the suppliers by warning them that the business could go kaput and, also, its own business by withdrawing some capacity.
The insurer is not withdrawing all capacity on Thomas Cook, just some, and suppliers were given a month’s notice, but these nuances get lost in the headlines.
The difficulty for trade credit insurers is that they’re an easy target: any troubled business can use them as a scapegoat. Also, the ‘big bad wolf’ story always makes a good headline.
Even politicians have used trade credit insurers as a political football.
Under the last government, former business secretary Peter Mandelson lampooned trade credit insurers and then tried to play the white knight to businesses with a government-backed trade credit scheme, which was, quite frankly, a botched operation.
What trade credit insurers need is a robust defence of their name through good public relations.
There needs to be a 24/7 PR response. If a damaging story is about to come out, it doesn’t matter what time of day it is, there needs to be a ready reply.
These days, journalists work at all sorts of hours, and many will push ahead with a story even if they can’t get a comment.
And what about the ABI? What is it doing to defend the reputation and interests of its trade credit members? The ABI did some good work last year on explaining its concerns over pre-pack insolvencies, but things seem to have gone quiet since then.
Finally, trade credit insurance chiefs need to make greater efforts to get their faces out in both trade press and national media to explain their position.
The fact is, public relations is hugely important for trade credit insurers, probably much more so than for other insurers that mainly slip under the radar.
Trade credit insurers are an easy target. If they want to avoid being bullied, they need to stand up for themselves.