Iceland’s suppliers have had insurance cover cut due to the ongoing concern of Brexit and the impact it may have on the supermarket’s supply chain.

French insurer Euler Hermes reduced its cover to the value supermarket’s suppliers during the summer, according to The Sunday Times. Rival insurer Atradius is reportedly following suit and mulling reduction in the cover it provides suppliers.

Suppliers use the insurance cover to protect against any risk of a customer going under after an order has been placed but before payment has been received.

The decision could have a knock-on effect on the supermarket chain if suppliers demand payment upfront.

The news comes during a time of ongoing troubles for the food retail sector, which has been affected by the rise in import costs – due to the fall in value of the pound – and a decline in migrant labour since the Brexit referendum.

Iceland said in a statement: “While it is true that Euler Hermes reduced the total cover available to Iceland suppliers earlier this year, as part of a general reduction in its UK exposure, this has had no effect on either the level of our creditors or our relationships with any of our suppliers.

“We have not been made aware of any planned change in the total cover provided by Atradius.”

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