Many credit insurance underwriters are “panicking” with their removal of cover for timber traders, a spokesperson for leading broker Aon Trade Credit has told TTJ.
His comments follow a call by Nigel Williams, chairman of The Timber Trade Federation’s (TTF) National Panel Product Division, urging panels traders to fight to prevent underwriters tarring all construction-related companies with the same risk brush.
Aon Trade Credit’s Alan Sarling said he was fighting to get cover reinstated for companies. But he recently asked nine underwriters to give cover to a timber frame firm without success.
“There’s no doubt traders are finding life a bit tough and certainly one or two underwriters have taken the stance to cull uncertain trade sectors and these are obviously linked to construction.”
Mr Sarling said this had created a ripple effect from agent to importer, merchant and manufacturer. He urged underwriters to withdraw cover gradually if they had concerns, rather than a “knee-jerk” response.
“I think we are going through the same thing [as the early 1990s] and I think underwriters are trying to steer clear of the high loss ratios they suffered then.”
He thought premiums would climb, with substantial hikes possibly to come, stemming from the increasing claims underwriters have had to meet.
But underwriter Credit Indemnity & Financial Services, which last year teamed up with Aon Trade Credit in a TTF scheme to offer credit insurance to the timber industry, said there was a danger of all underwriters being tarred with the same brush.
Sue Morley, the company’s director of client services, said CIFS was cutting back on cover in a measured way. “We have been relatively selective with who we’ve taken on in the first place and given special attention to people who are TTF members. It doesn’t mean we won’t have to make difficult decisions on credit but we will at least pick up the telephone and explain our reasons why.”
Leading underwriter Atradius, which has been accused of pulling cover across the sector, maintained to TTJ it was looking at risk on “a company by company basis” and was removing a tiny proportion of the biggest risks.
Bristol-based Robbins Timber said the situation was restricting business.
Its managing director Richard Bagnall said the dilemma was not knowing what information credit insurers had when reducing cover for Robbins’ customers. “Do we continue to trade with some companies without insurance?” he asked.
