Credit Insurers don't always get it right!
Credit insurers pay out millions of pounds in claims on companies that they believed were solid risks but weren't…everyone makes mistakes - even the experts!
With the recent demise of BHS the headlines have, quite rightly, concentrated on the vulnerability of the employment prospects of the 11,000 people at BHS and the huge hole in the pension pot. On top of that there will also be a number of companies who will be watching and waiting keenly in the wings wondering if they will get paid for the goods they sold to BHS.
Credit insurers had been tracking BHS for a very long time and came to conclusion that it was too great a risk to continue covering. With all the information (often obtained confidentially) available to them, credit insurance companies make calculated decisions as to whether to provide credit insurance or not. In the case of BHS, in recent times, the answer was clearly not. Sometimes a negative response from credit insurance companies can be a positive one for your company. Research has proven that companies who use credit insurance typically suffer fewer bad debts as they benefit from credit insurers guidance to steer them away from riskier customers.
Whilst the failure of BHS is regrettable, we expect to see more casualties amongst their suppliers, who may have lost their own key customer in BHS and will struggle to replace that lost business.
Credit insurance companies are sometimes criticised for withdrawing credit insurance cover as they believe the risk is too great. Where some companies believe that credit insurers should continue to cover the high risk, others appreciate the information and use it to change their stance - "maybe the risk is too great for me too".
If you'd like to discuss credit insurance over a coffee please do not hesitate to contact us on 020 8835 2587 or get a Quick Quote here.