Credit insurance 'is failing'

<p>The chairman of Borders UK has called on the government to intervene in the credit insurance market. This followed one of the UK&rsquo;s largest credit insurers withdrawing cover for publishers trading with Borders, The Book People and Baker &amp; Taylor shortly before Christmas.</p><p>Although he declined to comment specifically on Borders&rsquo; position, Luke Johnson described the credit insurance industry as &quot;an oligopoly&quot;, and as such could &quot;create particular problems quickly&quot; by effectively freezing trade.</p><p>Speaking to <em>The Bookseller,</em> Johnson said: &quot;I am in favour of markets, but where markets fail government needs to lead, and I think there is potential failure in credit market space.&quot;</p><p>Euler Hermes UK withdrew credit insurance on companies trading with Woolworths and its subsidiaries shortly before the group went into administration. </p><p>In the run-up to Christmas it was discovered insurance had been withdrawn for firms supplying Borders UK and Ireland, Books Etc and The Book People, prompting distributor LBS to advise its clients to reconsider their trading limits. The UK division of wholesaler Baker &amp; Taylor also had its cover pulled.</p><p>Johnson and Borders c.e.o. Philip Downer declined to comment on the reasons for the withdrawal. However, Seni Glaister at The Book People stressed that the wider economic conditions were to blame rather than company-specific problems.</p><p>She added: &quot;We are all aware that the outlook for 2009 is grim in the wider retail market but it is our intention to work hard to continue our pattern of growth and we have plenty of exciting new ventures to look forward to that will demonstrate our pro-active response to the downturn.&quot;</p><p>Fabrice Desnos, Euler&rsquo;s c.e.o., said in a statement: &quot;Our first priority is always to protect our clients&mdash;the supplier&mdash;and to enable them to trade in a secure and stable environment. </p><p>&quot;We are not so na&iuml;ve however not to realise that our actions might impact on the buyer, which is why our decisions are taken seriously and after only very careful consideration of the consequences.&quot;</p>