The economy is under duress
The substantial rise in credit insurance claims is a clear indicator that businesses are falling short
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Credit insurers are seeing a huge increase in the number of claims in
South Africa, a clear indication of the struggling economy.
An executive at Alexander Forbes Risk Services, Brigitte Wood, said that it
was no longer possible to pinpoint which industries were more prone to credit
troubles than others.
"The remarkable thing about the current situation is that we're seeing claims
across the board," she said. "It's no longer about certain industries facing
industry-specific hurdles. Instead, every sector is showing a marked increase in
credit insurance claims as businesses fail to meet their obligations."
Alexander Forbes Insurance pointed out another problem facing businesses in
the current economy. "Not only are business conditions tougher," pointed out
Wood, "but it is also much more difficult, and in some cases impossible, to
access credit."
The way businesses handle the current issue varies from industry to industry.
Some can afford to insulate themselves by putting up their prices (basic
commodities and consumables in demand, for example).
However, some sectors, such as the steel industry, cannot sustain a slowdown
of more than 20% and are struggling to deal with other factors such as weak
demand.
Credit insurers call for 100% honesty when making claims. "Involving credit
insurance professionals at the earliest stages allows them to use their wide
industry knowledge, relationships and good credit standing to help solve
problems before they become crises - destroying the business and ruining many
people's lives," said Wood.
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