Insurance guarantee not enough for some

Under government proposals, due to be unveiled within weeks, the state will assume half the risk of cover provided to construction companies by private insurers.

Credit insurance is used to protect firms against non-payment of bills, but has become increasingly scarce as fears over the credit-worthiness of construction companies grows.

It is thought the government will not step in where insurance has been withdrawn altogether.

Rudi Klein, chief executive of the Specialist Engineering Contractors’ Group, said: “The problem is there are a number of companies whose policies haven’t been renewed. What guarantee have they got that insurers will come back now to renew them?”

He also pointed to excess figures that put smaller companies at risk. “I know of someone in the steel sector who was asked to put up excess of £100,000. There’s no guarantee that this will drop.”