Credit insurer Amlin has confirmed this morning that it will honour existing contracts with clients but will withdraw its credit insurance services to prospective clients, reducing the number of underwriters in the UK.
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However a spokeswoman at Amlin told Microscope this morning it was not a business "that we wish to continue to develop" across all industries.
"We are not accepting any new [credit insurance] business but will continue to honour all our existing commitments. In the UK we have less than 4% market share (of a £320bn market), we are a very niche player," she added.
There is already a squeeze on credit insurance and Amlin's decision means there is now one less player in the market, said Craig Evans, sales director at credit reference agency Graydon UK.
"The majority of the IT channel is insured by Euler, Atradius and Coface but if a company is finding that their credit insurance is being pulled by one of the big three, [Amlin's] decision will limit the amount of cover out there," he said.
In a year the cost of credit insurance has doubled from 0.62% of revenues per year to 1.25%, according to sources in the channel and around 65% to 70% of ledger books are being covered on average, down from 80%.
There have also been suggestions that Atradius is refusing to underwrite new business, but Shaun Purrington, UK and Ireland regional director for the commercial space at the credit insurer, insisted this was not the case.
"That is not my understanding," he told Microscope, "where we are currently closed to new business is largely retail and construction, two areas where we have some real concerns about given the economic climate."
"The channel is showing signs of robustness as companies there have good credit management systems, so far we are not aware of any big claims that we have paid out but given the current climate that could change," he said.
At the same time, the French Government is looking to shore up its commercial sector and prevent credit from drying up further by underwriting the business of organisations that offer credit to their customers.
Christine Legarde, finance minister met with insurance and business leaders yesterday to discuss the prospect of a publicly owned credit insurer Caisse Centralse de Reassurance securing limits.
It was the lack of credit that forced Woolworths into administration this week and other well known retailers DSGi and Comet have seen their credit insurance limits reduced recently.
One of the big three credit insurers in the IT channel, Atradius used to be part of the Export Credit Guarantee Department of the Government before morphing into a privately owned business.
The French taxpayer, who unlike the British vocalise their feelings more aggressively, would have to foot the bill the credit insurance.
This was an interesting idea said Eddie Pacey, director of credit services at Bell Microproducts, but he was not sure how this would develop in practice. "It would have to be dedicated to certain sectors or certain sized businesses."