Euler gets aggressive with risky resellers

Euler Hermes has fired shots across the bows of risky resellers that are late in providing up-to-date management or audited accounts by warning them that their cover will be entirely removed.

Euler Hermes has fired shots across the bows of risky resellers that are late in providing up-to-date management or audited accounts by warning them that their cover will be entirely removed.

The largest underwriter in the channel, Euler has unsettled many wholesalers by cancelling limits valued at £150,000 and below that were written prior to 16 November last year on resellers it deems risky.

"In view of the continued deterioration in the UK economy we are unfortunately having to take further action in cancelling cover on certain buyers based on the current financial information we hold," said Euler is a letter sent to distributors.

This appears to be the first time that the insurer has moved to aggressively slash the cover provided to SME VARs. The first cut, implemented last week saw limits of £150,000 and below cancelled.

This week limits of £7,500 to £20,000 are being pulled and next week those at £7,500 and below will be removed. Buyers impacted will be showing in the red section of Euler Credit Intelligence Report.

"To reconsider these decisions we would need to see a copy of the next set of audited accounts and up to date management accounts," said Euler.

Martin Williams, managing director at credit reference agency Graydon UK, believed about a quarter of distributors in the UK could be impacted by this blanket reduction from Euler, "right down to the relatively small risks".

"Everyone is using hyperbolic phrases about the economy and we really are in danger of talking up the crisis. From some of the things that Euler is doing, you would think that half of the world is collapsing.

"Liquidations may rise in a bad recession by 100% but that is only 2% of the business population, everyone is getting carried away as 98% of businesses will survive," he added.

Distributors have maintained a healthy level of credit insurance but urged resellers to work with them to provide insurers up-to-date information.

"Good partners come together in times of stress," said CCD general manager Jon Bunyard.

"Euler is clearly working to reduce its exposure particularly where policies were underwritten by historic information, which on face value appears to be a sensible approach given the turmoil in the economy," he added.

Nick Tiltman, credit director for Computer 2000, said resellers needed to be transparent with the underwriters: "If companies are not sharing information, insurers will assume the worst and who can blame them in the current climate".

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