Trade credit insurance companies face substantial claims after the high-street stalwart Woolworths collapsed last week.
Euler Hermes said it still had policies with suppliers when Woolworths went into administration last Wednesday. Coface and Atradius, the other two big trade credit insurers, declined to comment.
It was widely reported the big three had terminated existing contracts and ceased offering new deals for Woolworths, which collapsed under £385m of debt.
But some existing contracts are being honoured and other policies could not cancelled at the time of the company’s demise, Insurance Times understands.
About 20% of suppliers usually have credit insurance, although that figure may be less for Woolworths because contracts were withdrawn.
MFI, the furniture giant, also went intro administration last week. And DSG, which owns Dixons and PC World, reported a £30m loss for the six months to October.
Both were damaged after trade credit insurers pulled cover.
Nick Starling, the ABI’s director of general insurance, refused to blame insurers for retailers’ troubles. “These companies are ailing because of the tough trading environment and the inability of their business models to cope.
“Not offering new trade credit insurance is a symptom of a failing business, not a cause,” he said.
In a separate development, Lloyd’s insurer Amlin is pulling out of the trade credit insurance market.
Charles Phillips, its chief executive, said making a return was becoming “extremely difficult”.
The company is in consultation about what to do with its trade credit team of about 30 people.
