Bill Grimsey, chief executive of DIY shed chain Focus has written to the business secretary Lord Mandelson asking for an investigation into the lack of available credit insurance.
Focus say less than 5% of stock is now being covered by credit insurers.
Builders Merchants Federation managing director Chris Pateman has also warned of the problems facing merchants if credit insurance is withdrawn.
The industry could shrink by 10% as smaller operators are starved of policies for customers failing to pay for goods supplied, Pateman said. “It can be the kiss of death. Insurance cover is being unilaterally withdrawn with no notice”
Pulling coverage indicates insurers see a heightened risk of bankruptcy among builders and one insurance boss, Fabrice Desnos, chief executive officer of Euler Hermes’s U.K. operation, has already described builders merchants as being in “a very, very difficult place at the moment”.