Trade credit insurance claims fell 9% in the first quarter, according to the latest report from National Credit Insurance Brokers (NCI).

But collection activity grew 27% on the corresponding period last year, suggesting a rise in claims will follow in the second quarter of this year.

MD Kirk Cheesman says the drop in claims is partly due to clients receiving good advice from specialist brokers and insurers.

“We are being more proactive in assessing risk and filtering out poor debtors,” he told insuranceNEWS.com.au.

“Trade credit insurance is not just a product that gets put on the shelf. It is about day-to-day advice to help clients avoid bad debt, rather than experience bad debt.”

Insolvencies soared and trade credit insurance peaked during the global financial crisis, Mr Cheesman says.

Now, despite similar numbers of company failures, a higher percentage of insolvencies are in the SME space, which has less impact on trade credit insurance.

About 43% of credit managers surveyed have experienced five or more debtor insolvencies in the past quarter and 57% say DSOs (days sales outstanding) have risen, according to the NCI report.

NCI’s trade credit risk index for the quarter was up 3.2% from the fourth quarter of last year.