Mandelson recognises the Unattractiveness of Credit Insurance
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?