Companies in crisis amid credit insurance vacuum
Trade credit insurers have withdrawn cover for up to 400 local businesses, threatening the trading future of major Australian firms.
A senior industry source told insuranceNEWS.com.au some Australian firms are facing a crisis in available credit insurance cover, which is often crucial to their operations.
An Atradius spokesman says the company “can confirm it has withdrawn cover on a small percentage of the most rapidly escalating risks on a global basis”.
She did not directly address the claim 400 businesses are affected but said a “surge in insolvencies” had forced Atradius to make changes to around 5% of its worldwide portfolio.
“The decision to withdraw from a small percentage of the most rapidly escalating risks on a global basis is not something we take lightly,” she said. “We endeavour to maintain cover for as long as possible and consider withdrawal as a last resort.”
Atradius claims it will only withdraw cover where there is unacceptable company information available to analyse risk, significant deterioration in the risk profile or very poor forecast exposure.
As reported by insuranceNEWS.com.au earlier this month, availability of credit insurance is under threat worldwide as major insurers retreat from a surge in unacceptable risk.
Though the penetration rate of credit insurance in Australia is relatively low at less than 10%, the policy is vital to some large market players such as exporters and retailers.
Credit insurance covers suppliers against failing to pay on goods and services. In Britain, claims increased 58% in the last quarter of last year and the withdrawal of cover in the UK has also affected major British retail giants.
Earlier this month Coface Australia GM Christian Vollbehr told insuranceNEWS.com.au Australia’s credit risk exposure has “has caught up with the rest of the world”.
A senior industry source told insuranceNEWS.com.au some Australian firms are facing a crisis in available credit insurance cover, which is often crucial to their operations.
An Atradius spokesman says the company “can confirm it has withdrawn cover on a small percentage of the most rapidly escalating risks on a global basis”.
She did not directly address the claim 400 businesses are affected but said a “surge in insolvencies” had forced Atradius to make changes to around 5% of its worldwide portfolio.
“The decision to withdraw from a small percentage of the most rapidly escalating risks on a global basis is not something we take lightly,” she said. “We endeavour to maintain cover for as long as possible and consider withdrawal as a last resort.”
Atradius claims it will only withdraw cover where there is unacceptable company information available to analyse risk, significant deterioration in the risk profile or very poor forecast exposure.
As reported by insuranceNEWS.com.au earlier this month, availability of credit insurance is under threat worldwide as major insurers retreat from a surge in unacceptable risk.
Though the penetration rate of credit insurance in Australia is relatively low at less than 10%, the policy is vital to some large market players such as exporters and retailers.
Credit insurance covers suppliers against failing to pay on goods and services. In Britain, claims increased 58% in the last quarter of last year and the withdrawal of cover in the UK has also affected major British retail giants.
Earlier this month Coface Australia GM Christian Vollbehr told insuranceNEWS.com.au Australia’s credit risk exposure has “has caught up with the rest of the world”.