Amlin pulls out of offering IT credit insurance

Credit insurer Amlin has confirmed this morning that it willhonour existing contracts with clients but will withdraw its credit insuranceservices to prospective clients, reducing the number of underwriters in the UK. The major players in the UK channel are Euler, Atradius andCoface but Amlin also



Credit insurer Amlin has confirmed this morning that it willhonour existing contracts with clients but will withdraw its credit insuranceservices to prospective clients, reducing the number of underwriters in the UK.

 

The major players in the UK channel are Euler, Atradius andCoface but Amlin also offered credit insurance including a top-up facility forfirms that had their limits reduced by the others.

 

However a spokeswoman at Amlin told Microscope this morningit was not a business “that we wish to continue to develop” across allindustries.

 

“We are not accepting any new [credit insurance] businessbut will continue to honour all our existing commitments. In the UK we have lessthan 4% market share (of a £320bn market), we are a very niche player,” sheadded.

 

There is already a squeeze on credit insurance and Amlin’sdecision 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 isbeing pulled by one of the big three, [Amlin’s] decision will limit the amountof cover out there,” he said.

 

In a year the cost of credit insurance has doubled from0.62% of revenues per year to 1.25%, according to sources in the channel andaround 65% to 70% of ledger books are being covered on average, down from 80%.

 

There have also been suggestions that Atradius is refusingto underwrite new business, but Shaun Purrington, UKand Irelandregional director for the commercial space at the credit insurer, insisted thiswas not the case.

 

“That is not my understanding,” he told Microscope, “wherewe are currently closed to new business is largely retail and construction, twoareas where we have some real concerns about given the economic climate.”

 

“The channel is showing signs of robustness as companiesthere have good credit management systems, so far we are not aware of any bigclaims 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 shoreup its commercial sector and prevent credit from drying up further byunderwriting the business of organisations that offer credit to their customers.

 

Christine Legarde, finance minister met with insurance andbusiness leaders yesterday to discuss the prospect of a publicly owned creditinsurer Caisse Centralse de Reassurance securing limits.

 

It was the lack of credit that forced Woolworths intoadministration this week and other well known retailers DSGi and Comet haveseen 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 theGovernment before morphing into a privately owned business.

 

The French taxpayer, who unlike the British vocalise theirfeelings more aggressively, would have to foot the bill the credit insurance.

 

This was an interesting idea said Eddie Pacey, director ofcredit services at Bell Microproducts, but he was not sure how this woulddevelop in practice. “It would have to be dedicated to certain sectors orcertain sized businesses.”


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