There has been a rise in the number of companies buying trade credit insurance to help protect them during the economic downturn, according to the Association of British Insurers (ABI).
The ABI says that there has been an increase in the market for the cover for the third consecutive year. Since 2004, it has risen by 40 per cent which demonstrates that more companies are now reliant on this insurance to help them cope with risks caused by the unsteady economy.
The news that small businesses are recognising the importance of taking out appropriate cover has been welcomed by Nick Starling, director of general insurance at the ABI. He said: “While the economy is failing, trade credit insurers expect to pay out more claims during 2008, as business insolvency’s rise.”
Lloyd’s of London’s chairman, Peter Levene, has warned that the insurance market is at risk because of lower tax rates in other countries. Mr Levene has called upon chancellor Alistair Darling to take action and amend tax treatment in the UK, says Bloomberg .