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Trade credit insurance: A key to growth and financial resilience in UK construction

The construction sector remains a cornerstone of the UK economy. It drives infrastructure, housing, and commercial development.

16/12/2025 · 4 minute read

The construction sector remains a cornerstone of the UK economy. It drives infrastructure, housing, and commercial development. However, this vital industry faces numerous challenges including:

  • economic volatility;
  • supply chain disruptions;
  • labour shortages;
  • and evolving regulations.

In this context, trade credit insurance can serve as a crucial risk management tool for companies striving to succeed and grow.

Challenges in the UK construction sector

According to a survey conducted for Marsh’s Trade Credit Report 2025, 88% of finance directors in construction say it has been harder to grow their business in the past 12 months compared to the previous year. This is higher than in the food and beverage (86%) and in manufacturing (80%) sectors.

The UK construction industry is highly sensitive to economic cycles, and recent global economic conditions, such as tariffs and other trade-restricting measures, have introduced significant headwinds.

Inflationary pressures have been pronounced, with the prices of key raw materials such as timber rising sharply. These cost increases have squeezed profit margins for many UK construction firms. This has forced them to reassess project budgets and timelines.

Labour shortages continue to pose a significant challenge, and although rising wages benefit employees, they add to operational costs and can delay project completion if staffing levels are insufficient.

Despite these challenges, certain segments within the UK construction sector continue to show resilience and growth potential. For example, the push towards sustainability and green building practices is showing progress, opening new avenues for development. While reducing interest rates are expected to support recovery in residential construction.

The risk of extending credit beyond safe limits

In response to economic pressures, many construction companies extend substantial credit lines to clients beyond their comfort levels to maintain healthy cash flow. The Marsh survey revealed that 98% of construction companies admit to giving customers larger credit lines than preferred. This highlights the significant pressure to preserve business relationships and secure projects.

Despite this, only 48% of construction companies reported purchasing credit insurance. This adoption rate is considerably lower than other sectors like:

  • 80% of manufacturing firms;
  • 70% of life sciences companies;
  • and 66% of technology firms have coverage.

At the same time, construction companies identified the rising risk of non-payment as their biggest growth barrier in 2025. This emphasises the urgent need for robust credit risk management strategies.

The critical role of credit insurance

In today’s uncertain economic climate, credit insurance is essential for construction businesses aiming to protect their financial health. Large contracts with extended payment terms expose companies to significant credit risk, where payment delays or defaults by clients, subcontractors, or suppliers can disrupt cash flow and threaten continuity.

Credit insurance covers losses from non-payment. This helps firms manage receivables with confidence while safeguarding cash flow and enhancing creditworthiness. Insured receivables are seen as lower risk, improving access to financing on better terms.

Beyond financial protection, credit insurers provide valuable market intelligence and credit risk assessments. This enables more informed decisions and reducing exposure to bad debts. This proactive risk management is crucial in a sector prone to project delays and payment disputes.

Additionally, credit insurance supports growth by allowing companies to pursue new opportunities without fear of payment defaults. This fosters stability and enabling focus on operational excellence and innovation.

The need to build resilience in construction

As the construction sector continues to navigate a complex economic landscape, resilience and adaptability will be key to long-term success. Companies that integrate credit insurance into their risk management frameworks position themselves to better withstand economic shocks and capitalise on emerging market opportunities.

Investing in credit insurance is not merely a defensive measure; it is a strategic enabler that supports sustainable growth. Credit insurance empowers construction firms to maintain momentum even amid uncertainty by:

  • protecting cash flow;
  • improving access to finance;
  • and providing critical market insights.

Please get in touch with your Marsh advisor for more information on trade credit insurance
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Rebecca Liddle

Rebecca Liddle

Business Development Manager, Trade Credit, Marsh Specialty UK

  • United Kingdom

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Andy Desmond

Marsh UK Industries - Construction Industry Leader

  • United Kingdom

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