Credit insurers undermine financially sound retailers

by David Masters

Story link: Credit insurers undermine financially sound retailers

Credit insurers have ’severely hampered’ the recovery of the high street fashion industry by withdrawing cover at the time when it is most needed, a leading accountant warned this week.

Bobby Lane, partner at charted accountants Shelly Stock Hunter, said the government has done ‘too little, too late’ to protect the industry from the effects of a shrinking economy and rising unemployment.

Writing in The Times, Lane said insurers have, on at least one occasion, pulled cover from a retailer’s supplier without any advance warning or investigation into the health of the retailer’s finances.

“The insurers had not contacted any party associated with the business to discuss its performance or financial position, but had clearly based their decision solely on their appetite for the sector,” Lane claimed.

Both credit insurers and retailers must rethink their operations to facilitate better communication, and to ensure that as many retailers as possible survive the downturn, Lane said.