BRC calls for extension to trade credit insurance |
| Industry News | |
| Tuesday, 20 October 2009 | |
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The UK's retailers have demanded an extension to trade credit insurance top-up in the run-up to the crucial Christmas trading period. Almost 40% of large retailers and 28% of small and medium-sized (SME) retailers said the reduction or withdrawal of trade credit insurance had negatively impacted their businesses, according to the British Retail Consortium's (BRC's) latest Quarterly Credit Conditions Monitor, published today (Tuesday 20 October 2009). The vast majority of respondents (92% of large firms and 74% of SMEs) said trade credit insurers did not assess risk accurately. One retailer told the BRC that credit insurers, "apply industry-wide criteria to individual companies without looking at specific circumstances. It is easier for the risk assessors to just say "no cover" rather than argue for the insured company". In the April Budget the government announced the introduction of a temporary Trade Credit Insurance Scheme and has since improved some elements of it. But almost all retailers surveyed said this had not gone far enough. As many as 95% of SMEs and 85% of large retailers claimed the top-up scheme had yet to help their businesses. Extend scheme To make a real difference the BRC claimed eligibility for the top-up scheme cover period must be extended back to 1 April 2008, when insurers started to remove cover as the downturn began. The current cut-off date is 1 October 2008. The top-up scheme is due to end on 31 December 2009 but 77 per cent of large retailers and 59 per cent of SMEs said it should be extended beyond this date. Tom Ironside, BRC business environment director, said: "It's vital to retain trade credit insurance - especially in the important run-up to the Christmas period and beyond. "If trade credit insurance is withdrawn, suppliers demand to be paid up front. This can cause cash flow problems for retailers, leading them to cut jobs and stock as they divert money to pay suppliers. "Retailers are far from convinced that insurers accurately assess trade credit risks. The government must put pressure on these companies to ensure proper research is undertaken so more accurate underwriting decisions are made. "The top-up insurance scheme is due to finish at the end of this year and VAT is returning to its higher level at the same time. To prevent the retail recovery and the three million jobs provided by the sector being undermined, the top-up scheme must be retained into 2010."
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