QBE’s actions to reduce risk in its trade credit portfolio during the coronavirus outbreak have hit suppliers to department store groups Myer and David Jones.

The insurer says it has advised the two retailers of a decision to “reduce trade cover from mid-July”.

“While we appreciate this is a difficult time for these two retailers, we believe this is a prudent course of action in the current market conditions,” a QBE spokesman told insuranceNEWS.com.au.

“We have advised both Myer and David Jones of our willingness to continue to review our position as and when further information about market conditions becomes available.”

QBE advised in April that it was reducing exposure to high-risk trade credit sectors including airlines and travel, leisure and hospitality, retail and consumer, and automotive.

The company’s trade credit gross written premium last financial year was $US195 million ($282 million).

A Myer spokesman says the decision is disappointing, but the company doesn’t believe QBE provides substantial coverage over its business.

“We obviously don’t subscribe to QBE’s view around the future of department stores,” he said. “As our suppliers are aware, we have not changed payment terms during COVID-19 and have and will continue to pay our suppliers according to agreed terms.”

Myer will continue to work with its suppliers in delivering suitable commercial terms with or without trade credit insurance sitting in the middle, he says.

David Jones, which is owned by South African-based Woolworths Holdings, had no immediate comment.