I am a successful and responsible business owner who, like I am sure many others over the last few years, has had to not only deal with a challenging economic environment but have also sustained several bad debts. Get credit insurance I hear you cry… I have it I answer. However, the insurance company effectively picks and chooses which of my clients it covers and their decision is based on the most basic of company information… ‘computer says no’. The result is that I am only insured against approximately a third of my client base. The insurance premium is based on my total turnover and so there is not even a reduction to take account of those clients not covered. Don’t do business with the uninsured clients I hear you say. Firstly I do not have the luxury to turn business away simply based on this criterion and secondly the majority of the uninsured clients are actually extremely reliable payers who I have had a relationship with for many years (this however is also not taken into consideration). I do not know the actual statistics but I believe these are contributing factors to more companies not using credit insurance than those that do. But I have what I believe is an obvious, logical and financially sensible idea to rectify this unsatisfactory situation. Moreover, had my idea been in place over the last few years alone I believe it would have prevented literally thousands of companies going bust unnecessarily.

So here it is… We rightly all agree and see the sense in the legal requirement that anyone driving a vehicle on the highway is insured against either causing injury or having injury caused to them. In the case of the latter this would come into play if the other drive was uninsured and therefore driving illegally in which case they would also face criminal prosecution.

However, we seem perfectly happy to let companies ‘drive around’ uninsured so that when they go bust they not only write off their own ‘vehicle’ (in this analogy the company) but also  potentially cause a pile-up. This domino effect filters both down and up, causing bad debt to both customers and suppliers. Inevitably some of those customers or suppliers will in turn go bust and on and on it goes…not an isolated little bump but a huge pile-up with many casualties.

The solution is blindingly obvious: Rather than SOME companies CHOOSING to insure SOME of their customers/suppliers against causing a bad debt to THEM …it should be completely the other way around. ALL companies should legally HAVE to put insurance in place against them causing a bad debt to OTHERS.

To quote a leading expert in the insurance field… ‘Simples !’

Why is this idea important?

It is important that as many companies that can stay in business do, for all of the obvious benefits to the economy in terms of tax and employment etc.

My idea would prevent the domino effect that has undoubtedly caused many good, successful and sound businesses to go bust over recent years.

As it would generate more money in terms of premiums to insurance companies this too would be good. I wouldn't even be surprised if with a much bigger pot to pull from the premiums would actually go down from the current levels.

Lastly, I have discussed this idea with a friend who until recently was the chairman of one of the UK's largest independent commercial insurer, and he agrees. The only possible down side (he said) might be that companies may feel happier to take more risks. However the more we discussed it the more this didn't stand up. Just because your car is insured do you drive like a maniac? …no. If you did are there laws in place to prosecute you and ban you from driving a car in the future?…yes.

I'm sure you get the idea and I hope very much to hear back from you with your comments.

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