ABI assistant director, head of property, commercial and specialist lines Mark Shepherd warns on the importance of trade credit insurance after insolvency rates rose in 2017
Insolvency levels are at their highest since 2013, leading the ABI to remind businesses, insurers and brokers of the importance of credit insurance.
The total number of insolvencies in 2017 was 17,243. This was up 4.2% on 2016 when there were 16,545. The government’s figures for 2017 show that insolvencies were at the highest level since 2013, when there were 17,682.
ABI Assistant Director, Head of Property, Commercial and Specialist Lines Mark Shepherd said: “With over 300 business insolvencies every week in 2017, never has trade credit insurance been more important.”
Shepherd continued: “As Carillion has shown, one insolvency can risk a domino effect to hundreds of firms in the supply chain.”
Trade credit insurance brokers and Biba’s Trade Risk Focus Group chair Mike Clark have warned of the domino effect that is likely from construction giant Carillion’s liquidation, which has already exposed a vast gap in credit cover.
More insolvencies are expected to follow, impacting on businesses and suppliers and posing challenges for underwriters.
In terms of the initial liquidation, just £31m is expected to be paid out by trade credit insurers, while analysts estimate Carillion’s debt at £1.5bn around the time of its demise.