Credit insurance difficulties threaten banks’ lending
Barclays and Royal Bank of Scotland are predicting trouble ahead for UK businesses as credit insurance becomes more difficult to obtain.
According to a report in The Times, representatives of the banks appeared before the Department for Business Select Committee yesterday and suggested that problems with trade credit insurance were preventing banks from lending to small businesses.
Trade credit insurance protects companies when customers fail to pay or enter administration and withdrawal of the insurance or poor access to cover could stop banks’ customers from being able to repay their loans.
Companies may cease trading with firms that represent a high credit highest risk, threatening an already unstable economy.
In November, the Association of British Insurers reported a 59% increase in trade credit insurance claims during the three months to the end of September. Claims rose in value to £97 million compared to £61.4 million in the same period of 2007.
Earlier this month, leading credit insurer Euler Hermes issued a profit warning.
The company, which is owned by German insurer, AGF-Allianz, said that following the collapse of Woolworths Group (UK) and taking into account a higher than expected number of claims in the fourth quarter of the year, it expects to record profit of €100 million, in 2008.
Category: Business Insurance News, Insurance News
Visited 1904 times, 1 so far today
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.