Small businesses are being hit by a steep rise in the cost of credit insurance taken out to cover bad debts

Many are finding they are unable to get cover at all.

Credit insurers have confirmed they are increasing premiums by up to 40% for clients who are renewing their contracts, and in some cases by much more. They are also refusing to provide cover for some operating in high-risk sectors such as retailing and construction and are turning away large numbers of new customers.

Credit insurance covers small firms for bad debts suffered if one of their business customers is unable to pay, usually because it has become insolvent. Without it, firms themselves are forced to take on the risk of customers not paying. If the amount owed is large and not paid, the business could be forced to close.

Shaun Purrington, regional director at Atradius, one of the biggest credit insurers in Britain, said: “It is fair to say that compared with six months or one year ago small businesses will find it more difficult to get credit insurance. I’m afraid that the appetite of credit insurers to write new policies has declined.

“Companies that come to us and ask for cover on firms [they wish to trade with] that are clearly in financial difficulties, or that are operating in very difficult sectors, will find it nearly impossible to get cover.”.....read more.

Source: TimesOnLine

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