Trade credit insurance covers firms against the risk of not being paid for goods or services that they provide, following an insolvency, protracted default or political upheaval. Latest figures show that, in 2016 across all industries, trade credit insurers paid out 拢210m to businesses due to non-payment.
For insurers, Carillion is just the latest in a number of company collapses such as Monarch, Palmer & Harvey, Multiyork and Misco.
Mark Shepherd, ABI head of property, commercial and specialist lines, said: 鈥淭he 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."聽
The 拢31m total insurance payout will be useful to many firms but it looks like small beer in the grande scheme of things. It is聽 estimated that as many as 30,000 businesses are owed money for work carried out for Carillion prior to the liquidation and Carillion鈥檚 latest accounts show it sitting on 拢800m of subcontractors鈥� money being held in retentions.
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