Credit insurance company Coface met plywood traders this week and insisted that it did not take a whole sector view when assessing risk in the timber trade.
Ben Hussell, Coface Credit Insurance’s risk underwriter for the timber sector, told members of the Plywood Club of London that it was important companies were open and talkative about their businesses when liaising with insurers. “The more open companies are, the more positive the outcome,” he said.
“When I speak to people in the trade, there is a positive mood, a general feeling that demand is starting to pick up, but [from the credit insurers’ perspective] risk has to be priced.
“We are not charities. We have shareholders to please and we have to make a profit. We are not making any money at the moment and I do not think the other insurers have been making any money for a few years.”
Mr Hussell said Coface’s current claim rate was three times higher than 2007.
Coface London region sales manager Mark Barton said a 55% claims-to-premium loss ratio was a key figure being looked at by credit insurers when assessing whether they could provide cover. “In previous years it would be 100% one year and 10% the next. But not now.”
Mr Hussell added that Coface’s official view is that the economy is in a V-shape recession but with “significant risk” of falling back again, which some plywood traders described as “hedging its bets”. But Mr Hussell thought the UK timber trade was well placed to capitalise when housebuilding expanded.
