Construction firms could be denied credit insurance as insolvencies peak.
Construction companies could start to be denied credit insurance by underwriters. Credit insurance protects against bad debt following the insolvency of a client or contractor.
Insurers loss ratios in recent years have been so high, that there are predictions of a severe increase in premium rates and an inability to negotiate long-term trade credit insurance arrangements. As a result Underwriters with a commitment to construction now come at a high cost.
A trade credit insurance is not just an insurance policy; it is a risk assessing tool. Credit insurance can point out whether it is a good time to do business with someone or not. Companies want the ability to assess risk. Smaller firms do not have the ability or expertise to monitor the whole economic horizon.
But before a policy is written, a trade credit insurer will monitor the economic situation and will look at indicators. If, for example, they see a share price of a company is falling rapidly, then they will no longer be likely to offer insurance to work with them. Insurers will not take on the risk of something which looks to be particularly uncertain.
Insurer Euler Hermes said it would continue to offer insurance to suppliers of major house builders – but admitted it was now charging more. Chief Executive Fabrice Desnos said: "In the current environment we will be far more cautious. We will be looking for more information, more disclosure and we will be very careful on making new policies. As a result, premiums will be higher.
There is still some substantial value in the bigger construction companies and there is a belief that they have enough strength to withstand a crisis over the next couple of years or so. But the smaller, more specialised subcontractors are extremely vulnerable. The number of insolvencies in the construction industry in the first half of this year is double that of last year."
As insurance premiums soar, you need to be confident that your broker is providing the most competitive quote available. Oval ensure that this is possible by remaining independent, using its substantial buying power and having a specialist credit team in place that deal with this changing market place on a day to day basis.
Allow Oval to obtain a quote on your behalf and you will have peace of mind that not only are the big composite markets approached but that specialist markets exclusive to Oval are also approached. These markets know about the work that you are involved in and are therefore able to provide not only competitive premiums but comprehensive levels of cover.
Call Danny Harwood now on 01376 574238 to ensure that you are getting the best results.