Insurers paid nearly £36 million in insurance claims to small businesses last year due to customer insolvency or late payment, according to new figures from the Association of British Insurers (ABI).
The group said a total of £150m in trade credit insurance claims was paid out across all businesses in 2015, an increase of 41% on the previous year.
Small businesses made almost 4,400 claims that were worth £36m, accounting for 40% of the total claims made to trade credit insurers which were valued at £149m.
Small and medium-sized enterprises (SMEs) in the UK took out more than 7,000 trade credit insurance policies last year, the ABI also said.
ABI general insurance manager Mark Shepherd said that compared with larger companies, small businesses are more vulnerable to financial setbacks, with customer insolvency or late payment having a greater impact on them.
“Trade credit insurance is crucial for all businesses to help them navigate potential risks. In particular, SMEs looking to grow can have confidence that a trade credit insurance policy will help them to do this whilst guarding against the unexpected,” Shepherd said.
Besides providing cover when customers do not pay debts or make late payments, trade credit insurance also supports small businesses by helping improve their access to bank funding, the ABI said.
It can also facilitate business expansion into new international markets by helping reduce the risk of exporting overseas.