Credit insurer pulls cover for Iceland’s suppliers amid rising costs

A leading credit insurer has cut its cover on suppliers to Iceland as the supermarket faces growing pressure amid the rise in energy costs.

According to the Times, Coface has reportedly pulled its cover on Iceland to zero, following on from Allianz Trade and Atradius who also cut their coverage on the group last year.

Credit insurance protects suppliers in the event of a retailer going bust between an order being delivered and a payment being received. 

The removal of this cover can lead to suppliers demanding payment upfront, putting more pressure on a retailer’s cashflow.

While the Times noted it was “unusual” for grocery retailers to be targeted by credit insurers, it said Iceland’s reliance on large chest freezers means it is “disproportionately exposed” to rising costs. 

Amid the rising cost of energy, Iceland’s energy bill jumped from £70m to about £155m in the last year. 

In response, last month chairman Richard Walker told Bloomberg the retailer would reduce the amount of chilled food it sells to try to lower its energy bills. 

He said the supermarket chain would also stock more room-temperature products instead of chilled, and use more modern fridges, putting doors on warehouse fridges and solar panels on stores and warehouses to be more energy efficient.

Iceland has been contacted for further comment.