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Daily Insurance Industry News
Thursday 18th of January 2018
February 25, 2009

Trade credit insurers usurp rating agencies

by Gill Montia

Story link: Trade credit insurers usurp rating agencies

Trade credit insurers usurp rating agencies

Trade credit insurers have found a new role in the UK and are taking over from the tradition credit rating agencies in monitoring the credit worthiness of businesses.

The claim is made by Aon Trade Credit, which says that the shift in power makes it important for companies to work with credit insurers to enable credit lines for their key suppliers.

Aon points out that while credit rating agencies play an important role in identifying a company’s financial strength, “insurers are one step ahead as they use both historical data and up to the minute payment/ key management information”.

They also have insights into buyers’ business models and future strategies.

In addition, insurers’ clients include companies of all sizes and not just the larger corporations that are the subject of the rating agencies.

Aon’s head of trade credit in the UK, Stuart Lawson, comments: “The key is not to see this as an unnecessary intrusion but view information requests from insurers as a positive step to enable credit lines to be maintained or even increased.”

Mr Lawson warns that when a major customer becomes insolvent a business with no trade credit insurance can be compromised.

With insolvencies on the rise, the importance of credit insurers in the health of supply chains is increasing.

 

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