Aon: government must help firms hit by withdrawal of credit insurance

Credit insurance broker Aon Trade Credit has said that government must "act rather than just listen" and offer support for industries such as paper merchanting that face the withdrawal of credit insurance.

It said this week that action from the government is "long overdue" adding that support needs to given not to the riskiest companies, but for those companies that do pay on time.

Susan Ross, Aon Trade Credit director, said trading companies need an option to buy committed cover for a fee, in addition to the regular credit insurance premium.

"If the insurer withdraws cover, but the customer is paying on time, then the limit stays in place for six months or so," she said.

Aon said there had been some progress, with Lord Mandelson now directly addressing businesses that need support, rather than just talk.

However, thus far in the credit crisis, the government has concentrated on measures to keep banks lending, and Aon said there is also evidence that take-up of new facilities has been "patchy".

James Bowker, Aon account director, said that in the absence of government support, businesses in the print sector should work with insurers to obtain what they can from the commercial market.

Aon said it is working on the basis that government succour for credit insurance cannot be taken as a given. 
He said: "There is speculation that if a scheme is announced which incorporates elements of initiatives already employed in other countries, it will not be the cure some would like.

"Specifically, it is possible that insurance cover would be offered only where cover is already being underwritten by an existing insurer."

He said the government would top up an existing limit in this scenario and not take risks where underwriters had completely withdrawn.

He added: "We have noticed that companies are far more willing to work with brokers and insurers in providing up to date financial information than in the past.

"This openness has, to an extent, contained the reduction in credit insurance availability."