This marks an increase of more than 40% from the previous year and is the highest amount paid out since 2009, with a record £314bn of UK trade now covered by credit insurers.
The number of claims made in 2016 also peaked to its highest level in seven years at 12,221, which corresponds with the total number of company insolvencies in the UK rising by 12.6% from 2015.
“In a climate of economic uncertainty, businesses are increasingly using trade credit insurance to protect themselves against the risk of non-payment,” ABI head of credit and surety, Trevor Williams, said.
“The fact that insured trade is at a record high is testament to the value businesses are increasingly placing on trade credit insurance, allowing them to trade with a safety net of protection against the evident as well as unexpected risks.”
A fifth of policies last year covered businesses exporting goods and services, with just over three-quarters covering domestic trade.
The share of gross written premiums by distribution channel was found to have remained fairly consistent, with 93% recorded as going through an intermediary, suggesting the importance of a broker in raising awareness of the coverage.
The ABI anticipates that economic volatility and subdued UK growth across the manufacturing and services sectors will see the trade credit insurance market continue to increase as businesses look to protect themselves from insolvency.
“Trade credit insurance is an essential tool in enabling businesses to trade safely, both domestically and overseas,” Williams continued.
“Without being able to claim for non-payment, UK businesses would have lost out to the tune of £4m a week – a significant figure, which would have been a direct hit on their bottom line.
“Businesses are unable to bear the brunt of non-payment, which can have a detrimental impact on their financial health and can also have a negative knock-on effect rippling down the supply chain.”
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