Premium Hikes and Cover Withdrawal Fail To Deter Usage by UK Companies
Less than one in ten UK businesses that use credit insurance have stopped using the service as a means of safeguarding their cashflow amidst the economic downturn, despite an increase of up to 40 per cent in premiums during the last twelve months, according to new research from commercial credit referencing agency, Graydon UK.
Over half (51 per cent) of companies surveyed confirmed that at least part of their business was credit insured. Only 7.2% of these companies then confirmed they had recently ceased to use credit insurance. Meanwhile, nearly half (43 per cent) of companies questioned also revealed that over half of their annual turnover remains fully credit insured.
The survey findings also suggest that the rising fear of commercial fraud as the economy contracts may be to some degree unwarranted. Of the companies questioned, over half (51 per cent) stated that they believed commercially fraudulent activity to be on the increase in the UK. Despite this, more than four in five (84 per cent) of the same sample stated that they had not witnessed any rise in fraudulent credit application processing themselves during the course of the last year, with just two per cent reporting a big increase.
The credit insurance findings come despite recent criticism, including from Government, of the credit insurance industry, amidst claims from unhappy customers of widespread withdrawals of credit insurance protection on buyer risks and suggestions that the credit insurance industry has seized up against the ongoing background of global economic uncertainty.
However, Martin Williams, Managing Director, Graydon UK, said: “Unfortunately, the fact that credit insurers have thus far only reduced their global risk liabilities by an estimated five per cent seems to have been choked in a thick fog of recessionary talk.
“There’s no denying that the UK and indeed global economy is struggling and credit insurance premiums have radically increased but suggestions that the credit insurance market has seized up are definitely premature. These findings show that despite the increase in cost, cover is still available on the large majority of commercial debtors for the many firms which want to protect their financial position.
Martin Williams added: “There are other options for business owners to consider when they can’t obtain cover from insurers on perceived “higher risk” businesses. These include self-insurance, whereby companies make calculated provisions for bad debt assessed on the likelihood of a client defaulting on payment, creating their own emergency fund to be accessed in the event that a company should fail.”
“Meanwhile, it seems that the fear factor is coming into play here with fraudsters emerging in the mind of the business community as the economic bogeyman. While it is essential that companies remain on their guard against the threat of commercial fraud, it is also important to maintain a degree of perspective and not allow fear to get in the way of ongoing operational activities.”
For further information contact:
Weber Shandwick Financial
Phone: 020 7067 0734
Graydon UK Limited
Phone: 020 8515 1400
Notes to Editors:
About Graydon UK
Graydon UK is one of the leading database information providers specialising in credit risk management. The company helps clients reduce the uncertainty of doing business by providing a complete, differentiated and high-quality package of credit risk management services. Graydon provides access to credit information and reports on companies in more than 130 countries worldwide. The Graydon group is owned by Atradius, Coface and Euler Hermes, three of Europe's leading credit insurance organisation. www.graydon.co.uk
In 2008, Graydon UK Managing Director Martin Williams was invited by Philip King, Director General of the Institute of Credit Management (ICM), to join the ICM think tank (an expert panel of 20-25 industry leaders who meet quarterly and act as an influencing force on all issues related to the credit industry in the UK.).That same year, Martin Williams was honoured by Credit Today, after being included on their Credit 100 list of people who have had the greatest impact in the credit industry during 2008.
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