CBI wants government action on credit insurance

by Gill Montia

Story link: CBI wants government action on credit insurance

The Confederation of British Industry (CBI) has written to the Prime Minister outlining a number of measurers that could be effective in supporting the UK economy during the current downturn.

The ten point plan highlights the dangers of credit insurers withdrawing cover and thereby forcing some companies out of business.

The Confederation is therefore calling on the government to become the credit insurer of last resort, as a temporary measure.

The role could involve supporting credit insurers with guarantees or providing direct insurance to companies that have had cover withdrawn.

The CBI’s director general, Richard Lambert, explains that in recent weeks a number of companies have had trade credit cover withdrawn despite the fact that they regard their credit practices as sound.

In some cases it would appear that credit insurers are withdrawing cover from small businesses because of the risk that some of their larger customers may fail.

Mr Lambert describes this as a worrying trend that could have dire consequences for the UK economy.