Trade credit insurers are expected to payout around £31mn in claims relating to the collapse of British outsourcing company Carillion, according to the Association of British Insurers (ABI).
Carillion is the latest in a number of high profile company collapses including Monarch, Palmer & Harvey, Multiyork and Misco.
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. The ABI said that latest figures have shown that trade credit insurers paid out £210mn to businesses due to non-payment in 2016.
ABI head of property, commercial and specialist lines Mark Shepherd said: “The 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."