Sevenoaks Chamber of Commerce business partner, FinCred IS, have provided a summary of the impact Covid-19 is having on the credit insurance market and the response from insurers during these difficult trading conditions.
Credit insurance protects businesses if their customers do not pay their debts for goods or services due to insolvency or non-payment within the payment terms. In the current climate this could be due to the impact coronavirus has had on their business.
Due to the trade shock resulting from the lockdown that most governments globally have enforced, businesses across a huge range of sectors are seeing a slowdown in payments from customers for goods or services.
Some customers are requesting a payment break for goods or services rendered. Businesses that have sought assistance from the Coronavirus Business Interruption Loan Scheme (CBILS) are being asked to exhaust all cost reduction options to qualify for a loan, which includes requesting extended payment terms from suppliers.
Insurers have recognised these trading challenges and liquidity issues and the subsequent slowdown in payments from buyers to their policyholders. To assist insureds during this time many insurers have relaxed the policy terms around reporting overdue customers to allow policyholders greater flexibility to manage these payment delays.
The message we are receiving from insurers is positive in terms of supporting policyholders to continue to trade. Insurers are reviewing their risk exposure in certain sectors in response to significant reductions in domestic and international trade. These reviews aim to establish where credit limit cover is still being utilised and to support insureds with demand led cover requirements.
Insurers are still open for new policies and companies seeking credit insurance cover. The risk environment is challenging, but enquiries will continue to be reviewed on a case by case basis.
If you are currently insured for credit insurance risks and have any questions about how these policy changes impact your business or you wish to enquire about cover then please contact:
Hannah Lyon-Wall at FinCred IS on Hannah_lyon-wall@fincred.co.uk or 01732 749754