Insurance claims by businesses to cover bad debt hit a record high of nearly $50 million during the third quarter of the year, according to the NCI Trade Credit Risk Index.

The average claim was $108,000 – the highest figure in five years. The total claims received value was 46% higher than the second quarter of $30.69 million, and more than double the total claims amount from the third quarter last year ($22.85 million).

The collapse of bulk fuel supply company Mega Bulk Fuels contributed heavily to the cost of insurance claims, as well as the collapse of NSW grain company Grainpro, construction supply firm Steller Lining, and fashion business Karen Millen.

NCI says 4357 overdue debts were recorded in the third quarter, down from 5557 in the second quarter. The Trade Credit Risk Index has risen, confirming riskier national business conditions.

MD Kirk Cheesman says the slowing economy and greater awareness of the need for trade credit insurance is causing the total value of claims to spike.

Many suppliers are struggling to pay their debts which can have major ramifications on business cashflow, he said.