Builders Merchants Journal – BMJ Publishing to Builders Merchants and the UK merchanting industry for more than 95 years
Builders merchant trade association, the Builders Merchants Federation has been working with members, the Department of Business and Trade, and the Association of British Insurers (ABI) to uncover the extent of difficulties obtaining trade credit insurance.
A survey of BMF members confirmed that credit insurance is recognised as a valuable business tool in the construction sector, with 45% of respondents using this solution. The survey also revealed an inevitable hardening of the market over the past 12 months, increased insolvency activity and related business concerns for the year ahead.
However, despite the impact of bad debts due to insolvency, more than half of respondents have not experienced credit limit reductions.
When limits were reduced, respondents acknowledged the increased credit risk reported by their insurer and took appropriate actions. The insurance industry is supportive of clients facing credit limit reductions, with 68% of respondents finding insurers receptive to appeals.
The insights gained from the survey provided valuable context on the current landscape in the building materials sector and informed the BMF’s detailed discussions with the ABI, which has led to the production of a guidance document specifically for the construction industry, which is fully supported by the Construction Leadership Council (CLC).
John Newcomb, BMF CEO, said: “Overall trade credit insurance remains an essential tool for our sector, with a significant portion of survey respondents expressing concern about bad debts affecting their business. We are pleased that the outcome of our discussions with the ABI provides new guidance which will help members when dealing with their trade credit insurance provider.”
The bespoke ABI Guidance Document can be downloaded from www.shorturl.at/zCET2
