Apollo 2000's collapse is a warning for insurers
Claims directors will be looking anxiously at their supply chains as more and more suppliers suffer from the credit crunch. As small businesses, these companies are on the front line – but they play a vital role in the insurance.
The recession has seen both Apollo 2000 and Empire Direct, two large electrical retailers with a small business in insurance supply, bite the dust.
Luckily, both companies were not large enough to cause any really big disruption. Instead insurers could phone around for alternative suppliers.
But what if a really big supply company goes down?
General Motors (GM), once the great-all American automotive giant, has been bought to its knees and is on life support with $13bn US government cash injection.
GM owns Saab, Vauxhall and Opel. And they’re all in deep trouble. What happens if their dealerships go under? How will insurers quickly find the right parts? How would they cope if the whole brand disappeared?
The solutions are not easy. But now more than ever is a time for insurers to have robust supply chains. That could mean a diverse list of alternative suppliers, good tracking systems for stock and most importantly, healthy communication with their suppliers.
In a separate but related point, trade credit insurance plays a vital role for suppliers. More and more suppliers are having their trade credit pulled, leaving them precariously close to insolvency.
Trade credit insurance is effectively a bit of a niche area dominated by Euler Hermes, Atradius and Coface. Is there an opportunity for some of the larger insurers to branch out and start their own trade credit service to their suppliers?
