Credit insurance at risk as insolvencies rise

Construction firms could struggle to raise credit insurance as the number of insolvencies rise, experts have warned.

At a time when firms need protection the most, Aon Trade Credit has predicted underwriters could completely withdraw cover by the end of the year.

It expects a rapid rise in insolvencies at the end of the year, which will see premiums jump 10% and possibly spark the withdrawal of credit insurance.

Aon Trade Credit director David Thomas said it was working with insurers close to the sector to try and protect at-risk firms.

He said: “With (insurers’) loss rations running in excess of 130% on recent years, we are predicting a severe increase in premium rates and an inability to negotiate long-term trade credit insurance arrangements.

“As a result, this is a very busy point in the UK construction insurance cycle and underwriters with a commitment to construction are now at a premium.”

Aon’s top five tips:

1. Share your balance sheet information with insurers to show your own credit-worthiness and reassure your supply chain.
2. Establish long-term contracts with insurers to help control premiums that are likely to increase going forward.
3. Reconsider insurers’ debt recovery arrangements if you have previously opted out.
4. Identify the need for special contractor wordings in existing or prospective wordings.
5. If you manufacture bespoke products, take out insurance cover for works in progress that have an extended manufacturing period.