Credit Insurance “Aftershock” predicted
Published:
26/02/10
Bob Lilley, MD of Credit Indemnity & Financial Services (CIFS), TTF’s credit insurance partner, is warning of the danger of a credit insurance “aftershock”, as dire trading conditions in the past 18 months impact on published accounts.
Neil Payton, CIFS senior risk underwriter, said: “The sector looks more positive than at this time last year, but the problem in assessing risk at present is that credit insurers often rely on historic published accounts and last year’s trading is producing some extremely weak figures. The danger then arises of a recessionary aftershock – and a resultant second wave of withdrawals of cover by insurers in the sector.”
CIFS is looking to reinforce its new paradigm of information sharing that involves insurer, policyholders and buyers. The company has invested in developing direct relationships with most of the major players in the sector, visiting them where possible and seeking management accounts and regular updates on the trading environment.
One TTF member who appreciates this approach is Mike Smith, Credit Manager of MLM: “We moved to CIFS on the advice of our broker. There have been no knee- jerk cancellations, with limit adjustments generally being discussed and agreed. In a number of cases we have put them in contact with our customer and issues have been resolved or at least better understood.”
Neil Payton concludes: “As we pull out of recession there are major concerns that, if historic trends hold true, insolvencies will increase. We all need to be vigilant and there’s an ongoing need for communication within the sector.
“Contracts are certainly picking up for some companies, with a more optimistic view from many house builders. Nonetheless, 2010 is going to be very challenging. The need for trust and reliable information is even more acute if insurers are to support the industry at the time it most needs it.”
more news...