Cost of trade credit insurance claims doubles

The cost of trade credit insurance claims has more than doubled over the last year, new figures have shown.

The number of claims made by UK companies against defaults on payments rose 48% year-on-year in the first three months of 2009 to 9,213, the Association of British Insurers (ABI) reports.

The value of claims made jumped by 166% in the same period, totalling a debt of £316 million.

Nick Starling from the ABI said that the figures were a "good indicator of what is happening in the UK economy", which contracted by 2.4% in the first quarter.

"Clearly, the economic situation remains very tough," he said.

Last month the Government extended and backdated its trade credit insurance top-up scheme, offering six months' worth of top-up cover to firms that have seen their trade credit insurance reduced since 1 October 2008.

However, Marc Shoffman from the Federation of Small Businesses (FSB) criticised the scheme for excluding small businesses.

"The minimum amount for the Government's top-up scheme is £20,000 which is over and above the cover small firms would require," he told More Than Business News.

"Our main concern with this scheme is that it only helps existing contracts so won't generate new businesses. We do hope this scheme will filter down the supply chain to ensure small firms can get paid promptly by larger organisations for the services they supply."

A spokesperson for the Department for Business Innovation and Skills said that, while the top-up scheme will remain under review, there are "no immediate plans to make changes".