The trade credit insurance sector increased its turnover by 6.6%, reaching £315billion in 2014 according to the Association of British Insurers. They explained that the improved economy in the UK meant that more business than ever before were taking out cover.

Due to this, the average premium for a trade credit insurance policy fell by over 2%. Nearly 10,600 of these policies were taken out last year and insurers received more than 10,300 claims. This figure represents a 1.9% reduction in claims from the previous year against the backdrop of a drop in company insolvencies in England and Wales to the lowest of levels since 2007.

Trade Credit Insurance is an insurance policy and a risk management product that is offered by private insurance companies and governmental export credit agencies to business entities, who wish to protect their accounts receivable from loss due to credit risks such as bankruptcy or insolvency. It protects business against commercial risks that are beyond their control, helping them to grow by minimising the financial implications they could be faced with; for example, sudden or unexpected customer insolvency.

Association of British Insurers stated that small businesses with a turnover of less that £5million, made more than 3,900 claims, which accounts for 38% of the total claims made. This type of insurance policy promotes financial growth by giving businesses the confidence and reassurance to extend credit to companies they are trading with. Trade credit is also a valuable tool in facilitating international trade by helping businesses to manage increased risks that come with exporting.

Other types of insurance policies that businesses can take out are bad debt insurance and business credit insurance. This provides your business with the crucial protection it needs against non-payment for either goods or services, which can be due to the failure of a customer to pay their bills.

Association of British Insurers Report