Credit crunch hits media insurance

LONDON - Media agency chiefs have warned that the credit crunch is hitting their ability to secure insurance cover on the media spend of vulnerable clients, leaving them exposed to greater risk and potential loss of business.

Woolworths... credit issues
Woolworths... credit issues

This follows reports this week that Woolworths has had difficulties obtaining credit insurance from the three major credit insurers. These include Euler Hermes, the company that supplies the majority of credit insurance covering media agencies for potential non-payment of media spend by clients.

However, Woolworths is thought to remain in negotiations over securing insurance on its £16 million media spend.

One agency boss said: "It's become a massive issue, especially in the banking and retail sectors, and this is leading to problems. Clients can get quite aggressive when you ask them to pre-pay."

Euler Hermes issues a monthly credit check to agencies using a traffic light system and agency bosses indicated that increasing numbers of clients are slipping into the amber and red "warning" categories.