Paper
EBB hails move to withdraw credit insurance
Elliott Baxter (EBB) has welcomed the potential withdrawal of credit insurance from the paper sector, blaming it for some of the problems print now faces.
The comments from EBB managing director Tim Elliott followed a claim from Aon Trade Credit that insurers may withdraw cover from the print market (PrintWeek, 25 July). The insurer’s warning was the result of the recent spate of print firm failures, which, it said, could cause credit insurance premiums to rise by 10%.
However, according to Elliott: The availability of credit insurance creates irresponsible lending. A merchant is encouraged to trade up to an agreed insured limit and many do, as no one will lose their job if the insured company goes bust.
Elliott claimed that if a paper merchant works closely with customers, it is far more likely to know its financial situation. He added that dramatic swings of cover from credit insurers often mean the premature demise of a firm. This knee-jerk reaction could see the availability of paper dry up almost overnight.
However, James Bowker, Aon leader for the paper sector, said: Credit insurers always have a difficult balancing act to perform.
Insurers are now more inwardly focused, examining their overall levels of risk exposure.
Elliot: welcomed move
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Comments
Simon Biltcliffe- Webmart - 15 August 2008
Rarely have I heard such utter twaddle (with the caveat that it doesn't end with the word Colin).
Insuring in a volatile market is far from irresponsible and it is the equivalent of a bank an overdraft. Without paper you cannot print + with the shortage of availability that is already in the market this can only further add to the woes of the printing industry.
I sincerely hope that they use pricing to realign their risk to profit ratio rather than very crude mechanism of withdrawing cover altogether.
Simon Biltcliffe
MD
WEBMART
www.FreePaperSales.com
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Julie Cook - 15 August 2008
Well Simon for all the twaddle, I only hope it happens. From the printer that pay's the bills on time every time, no 90days + for our suppliers or customers.
I don't want to pay for other peoples mistakes!!!!
colinthompsonsimonbitcliffeletspromotemysite.com
Not Colin Thompson - 15 August 2008
Colin would no doubt say that with the right management team and strategy, credit insurance is unneccessary. Great teams, etc. etc.
The risk for normal printers is that the 60 days credit we normally get for paper could come back to 30 days if the merchants cannot get credit insurance.
However, this is really just the next stage of the credit crunch. We have had a year when the banks wouldn't lend to each other. It seems inevitable that the next stage is that companies will not lend to each other (i.e. provide credit).
Look on the bright side, though, Simon: at least we're not in construction or estate agency........
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