A blog by Martin Williams, external affairs spokesman of Graydon UK, focusing on business risks - from fraud to late payment. Martin has has spent the last 35 years in the credit information industry, and has been with Graydon UK, one of the top five commercial credit agencies in the UK, for the last 20. Apart from his PR duties, he teaches credit analysis to risk professionals and helps educate SMEs on the importance of maintaining a good credit rating. Martin is a Fellow of the Institute of Credit Management and is a sitting member of the Institute's Think Tank. He was also 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, 2009 and 2010.
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13 Jan 2009
Last week, Lord Mandelson distanced the government from any introduction of a state guarantee to underpin vital credit insurance for UK supply chains. The big three credit insurers, Atradius, Euler hermes and Coface have all been criticised recently for withdrawing cover on buyer risks, reducing levels of indemnity and tightening up rules for policyholders in the event of claims. They say understandably that they are protecting their own business interests in the face of unprecedented turmoil- after all, they are not charities, able to underwrite any business risks in this turbulent economic situation. Mandelson seems to agree that what they are withdrawing cover on makes good business sense. Speaking about possible government intervention to top up insurance, he said "It's difficult to design one that would make a substantial difference.Would it be so marginal as to be-frankly-useless?" This suggests that after looking at the risks the credit insurers are looking at, Mandelson's team can't see how they would do anything different.
The recession already claimed one notable credit insurance scalp when Amlin Credit pulled out of the trade insurance sector before christmas. No one seems to find the service attractive at the moment- that goes for government, the insurers themselves, and their policyholders.Anyone got any stories supporting this view?
Visitor comments
Just try getting out of the policy - even if you have not made a claim!
We have paid for credit insurance for 27 years and the time we need it most and 2 months into signing a new policy we have had more than 20% of cover pulled with no prior warning and this has affected all of our best customers. The reason..........well, 9 times out of 10 there isn't one. Just that the customer was on the 'risky' list before the recession.
We pay premiums based on these risky list customers and most of them have been there for years - indeed this is the basis of all of the credit insurers marketing. Now that they are only insuring dead certs whats the use?
We have tried to get out of the policy and we stupidly thought that since we had not made a claim this would be easy - not so. We have been threatened with legal action if we stop paying premiums and have been told to expect many more limits to be pulled.
So, not only are these institutions speading up the demise of many SME's but they are also penalising their loyal customers by tieing them into contracts that are useless.
It wouldn't be so bad but our particular insurer made a net profit of €407 million in 2007!
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