Exporters suffer from insurance price crisis

By Freddie Dawson

- Last updated on GMT

Related tags: Insurance

Obtaining insurance cover continues to be a problem for UK food and drink exporters, despite domestic credit insurance being less of an issue than it was in 2009.

The sovereign debt crises in countries such as Greece, Portugal and Ireland, have caused particular concern for insurers, keeping premiums high, said Tim Smith, trade credit practice leader at credit insurance broker, Marsh. Equally, uncertainties about emerging markets, such as Asia and the Middle East, have also made insurers cautious, limiting the availability of cover, he added.

Export coverage remains as big an issue for manufacturers as it did in 2009, said Charlotte Lawson, member services director at the Food and Drink Federation. "No one should go on holiday without travel insurance and you do not want to trade overseas without contractual insurance."

Lawson recommended firms shopped around for the best deals to take advantage of the competitive domestic insurance market. Smith agreed that increasing competition meant better news for those seeking domestic credit insurance.

"Competitiveness is returning and we are now in what we'd call a soft cycle where premium rates are returning to stable at worst, and at best, good risk-managed businesses have begun to see premium rates reduce," he said.

Market growth had led to some credit limits being reviewed and reinstated, making more cover available, Smith added. Economic recovery had brought fewer claims than during the record highs of 2009. But for firms with cash-flow difficulties, it remained an issue, claimed Lawson.

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