QBE has halted trade credit protection for high-risk policies under a certain limit and made changes at higher levels in response to the coronavirus pandemic, taking affected businesses by surprise.

Brokers say cuts to cover were advised in emails sent over the weekend, without any prior flagging of changes that will have a significant impact on clients.

The insurer says the current situation is unprecedented and fast-moving and the action reflects the unique circumstances.

“These changes will allow us the flexibility to provide support to critical industries such as the health care sector, food and transport,” a QBE spokesman told insuranceNEWS.com.au.

“Additionally, in some cases, customers are curtailing their business or even shutting down. This in turn provides a significantly altered risk profile on industry sectors and specific businesses.”

QBE will not provide trade credit cover in high-risk areas for policies under $US250,000 ($406,300), has reduced cover by 25% across the board in the $US250,000 ($406,300) to $US1 million ($1.6 million) range, and above that level in high-risk categories it has reduced limits by 50%.

Any existing coverage for goods or services already committed will be unaffected, with the changes applying to business going forward.

The risk profiles of enterprises take into account exposures to areas such as aviation or retailing which are particularly affected by the coronavirus outbreak.

QBE is still allocating new credit limits and supporting limits in critical industries, effectively carving them out from the changes.

Considines Insurance Services broker David Rice says QBE has “pulled the rug” from under businesses with the sudden announcement.

“It is not really the right way to be acting in the current environment, when everyone is trying to assist small business and help them out,” he told insuranceNEWS.com.au.

Another critic says the move has the potential to dry up trade on credit and cause job losses, and was “un-Australian from an Australian company”.

QBE says it recognises that it is an extremely challenging time for many customers, and it encourages those experiencing hardship to contact the company so it can discuss ways in which it can assist.

The insurer says changes made to assist trade credit customers include extending the period where they must notify of a breach and easing rules on receivables and repayment plans.