Packaging News readers call for action on credit insurance

The survey, carried out last month, showed that 86% of respondents wanted government action to help struggling firms obtain credit insurance.

A nationalised insurance scheme was the favoured approach for some 61% of those who took part in the online poll, while a further 35% said the government should underwrite insurers.

Although the government has taken a number of measures to help small and medium-sized companies struggling with credit and cashflow, such as the Enterprise Finance Guarantee, it has not yet tackled the problem of credit insurance withdrawals head-on.

A spokeswoman for the Department for Business, Enterprise and Regulatory Reform declined to comment on whether the government would address the issue directly.

The poll also revealed the extent of credit insurance use in the packaging market, with three-fifths of participants saying they used such facilities.

Of these, 68% said their provider had withdrawn it from certain customers in the past six months, while a further 9% said it had been withdrawn across the board.

A common view was that credit insurers were not interested in providing insurance in a difficult climate.

One participant in the survey accused credit insurance providers of “making the credit crunch worse than it might be – they were happy to take premiums in the good times”.

Jo Aaron, corporate communications manager at credit insurance provider Atradius, defended withdrawing credit insurance as “a last resort”.

She said the packaging industry was not a blanket target for insurance withdrawals, although admitted certain sectors could be more susceptible than others.

“Firms dealing with discretional spend items, such as electronic goods, have been badly hit [by the credit crunch] and might see some credit insurance being withdrawn, but food and drink are still reasonably stable,” she said.

Credit insurers were not completely condemned by participants. One respondent said credit was a normal part of the market and firms should use an insurance withdrawal to question “whether to trade or not” with a particular company.

Another said: “When times are hard we need to take fewer risks or be prepared to pay far higher insurance.”

OTHER FIGURES
• 60% of respondents use credit insurance
• 61% said government should offer nationalised credit insurance
• 48% had altered credit terms to customers
• 45% were asking for cash up front
• 29% had stopped dealing with some customers

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