Credit Insurance News​

UK's PRA decision to maintain its approach to credit insurance may make credit insurance a less attractive option for banks. Global Trade Review (GTR) has reported that, in a blow to banks and credit insurers, the Bank of England's Prudential Regulation Authority (PRA) has stuck to its initial plans to increase capital requirements on exposures to insurance providers held by larger banks. Industry experts have argued that the decision means credit insurance is likely to become a less attractive option for banks that use the product for credit enhancement and to help with regulatory capital relief. The PRA says it "was not persuaded by respondents' arguments" for lighter capital treatment during its consultation on the Basel 3.1 proposals, citing a "lack of evidence that losses on exposures protected by credit insurance" justify such a move. To read GTR's article, go to https://www.gtreview.com/news/europe/uk-drops-plans-to-hike-capital-requirements-for-trade-finance/.

​

VIDEO: What does Basel IV look like for the trade credit insurance market? As part of the 50th Annual International Trade And Forfaiting Conference in Cyprus, Trade Finance Global (TFG)'s Editorial Director Deepesh Patel recently sat down with Carol Searle, General Counsel and Group Board Director at Texel Group, to discuss her outlook for the credit insurance market at large. Carole notes that, since the introduction of Basel II in 2004, the trade credit insurance market has grown significantly and is now worth more than $12.8 billion, with further groth of around 11% anticiapted over the next decade. However, many are wary that a tightening regulatory framework (specifically  Basel 3.1 but also often referred to as Basel IV) may threaten the market's dynamism, and Carole assess the impact that Basel !V could have on the trade credit insurance industry. To read TFG's article and watch the video, go to https://www.tradefinanceglobal.com/posts/video-what-does-basel-iv-look-like-for-the-trade-credit-insurance-market/.

​

UK Export Finance is making its credit insurance more accessible with a new online portal. UK Export Finance (UKEF) has launched an online portal for credit insurance applications. This means that UK businesses can apply for government export insurance without being required to complete a PDF form, a feature intended to shorten the application process significantly. UKEF notes that this is particularly valuable for SMEs, which may face challenges securing private-sector finance. Kate Dixon, Managing Director of Yarwood Leather (one of the first businesses to use the new portal), commented: "The support from UKEF has opened up new markets for us in territories which are not covered by our usual credit insurer." UKEF is aiming to support over 1,000 SMEs a year by 2029. To read UKEF's announcement, go to https://www.gov.uk/government/news/export-insurance-applications-made-simpler-for-businesses-with-new-online-portal.

​

Atradius and Mondu team up. Atradius and Mondu, a fintech offering Buy Now Pay Later solutions, have launched a collaboration aiming at providing businesses across Europe with an integration of the most popular B2B payment options into their e-commerce channels without the need for external payment gateways. This aims to enable merchants to provide their business buyers with an online purchasing experience, "similar to what they are used to from their private life as a digital consumer." The collaboration enables B2B merchants to offer deferred payment options ranging from 30-90 days net terms and 3-12 months instalments, with instant credit decisions by Mondu supported by Atradius. To read Atradius' news release, go to https://group.atradius.com/press/press-release/atradius-and-mondu-team-up-to-enable-better-payment-solutions-for-B2B-e-commerce.html.

​

The trade credit insurance implications of ISG's insolvency. Construction News has reported that sector experts have warned that contractors may find it harder to access finance as providers reassess risk in the wake of ISG's collapse (the £2.2billion turnover firm – ranked 6th in the latest CN100 rankings – called in administrators from Ernst & Young in September). James Burgess, Head of Commercial at Atradius, said ISG's collapse "underscores the challenges the sector is facing, with insolvencies rising and confidence being tested." He warned that trade credit insurance premiums may increase, with ripple effects through supply chains. "Access to funding may also tighten in the short term as lenders adjust to these changes," he said. “However, companies with strong financial health could find themselves in a better market position.” To read Construction News' article, go to https://www.constructionnews.co.uk/financial/isg-collapse-may-tighten-access-to-finance-experts-warn-30-09-2024/.

​

The next frontier in trade credit underwriting. Moody's recently published an article highlighting the distinct challenges faced by trade credit insurers of all sizes. Large insurers are focused on optimising underwriting efficiency, effectiveness, and resource allocation. Smaller insurers are focused on securing adequate market share to gather crucial market signals and feedback — such as payment behavior and industry insights. In this context, Moody's suggests that the trade credit insurance industry stands at a crucial juncture, where the future will be shaped by technological innovation and a deeper, more comprehensive approach to risk assessment. The article notes, "By addressing the challenges faced by insurers of all sizes and integrating a wider array of data into the underwriting process, the industry can enhance efficiency, effectiveness, and resilience in the face of an ever-evolving global trade landscape." To read Moody's article, go to https://www.moodys.com/web/en/us/insights/underwriting/innovation-in-trade-credit-insurance-underwriting.html.

​​​​

Cash flow "woes"in Asia Pacific encourage businesses to consider credit insurance. Insurance Business has reported that Aon's Working Capital Benchmarking Report for Asia-Pacific reveals that businesses in the region are facing slower cash conversion, with an average of seventy-one days delay in 2023 – a slight increase from the prior year. Noting that managing working capital is crucial, particularly when companies face extended payment cycles, Steve Taylor, Head of Credit Solutions at Aon in Asia, commented. "Businesses must identify areas for improving working capital availability and implement strategies such as using credit insurance to protect against the risk of non-payment, support revenue growth, and secure financing." To read the article, go to https://www.insurancebusinessmag.com/asia/news/breaking-news/cash-flow-woes-in-asia-pacific-drive-risk-management-focus--aon-507009.aspx.

​

The global economy is expected to grow moderately this year. Atradius' latest Insolvency Outlook, September 2024, suggests that the global economy is expected to show a moderate expansion of 2.7% this year –remaining steady but low by historical standards. Despite a relatively slow start to the year, the US economic outlook for 2024 remains positive, with a gradual slowdown through the rest of the year the most likely scenario. In the eurozone, growth is expected to remain sluggish this year. Southern European countries, such as Spain, Portugal and Greece, are doing relatively well. However, Germany remains a weak spot due to its sluggish manufacturing sector. To read Atradius' Insolvency Outlook, go to https://group.atradius.com/publications/economic-research/insolvency-forecasts-september-2024.html.

​

USMCA businesses are exploring more diversified approaches to credit risk, including trade credit insurance. Atradius' latest Payment Practices Barometer survey for North America (USMCA) has found that late payments currently affect, on average, around half of all invoices issued by North American businesses, while bad debt stands at an average of 6%. 35% of businesses across North America, particularly in the US, respond by delaying payments to their own suppliers. In this environment, Atradius notes that a significant trend shows many businesses are moving away from retaining customer credit risk in-house to explore more diversified approaches. This includes tools like trade credit insurance, which is used by around 40% of Canadian and Mexican companies, compared to 23% in the US. Factoring is also popular in Canada, where 46% of companies use it as a complement to trade credit insurance. To read Atradius' news release, go to https://group.atradius.com/publications/payment-practices-barometer/b2b-payment-practices-trends-north-america-usmca-2024.html.

​​

TreviPay and Allianz Trade announce a strategic partnership. TreviPay, a B2B payments and invoicing network, has announced a new strategic partnership with Allianz Trade. This collaboration will provide the option to integrate Allianz Trade’s credit insurance into TreviPay’s suite of trade credit and invoicing solutions, an addition, which TreviPay notes will be particularly beneficial for small to medium-sized businesses that may lack extensive credit histories. Recent research by TreviPay shows that seamless A/R automation and offering trade credit are pivotal for B2B buyer loyalty. The study found that 72% of business buyers are more loyal to businesses that offer their preferred payment methods, with trade credit being a top choice. Despite this preference, many businesses struggle to offer trade credit to their buyers, due to cash flow strain and concern around growing DSO. To read TreviPay's news release, go to https://www.trevipay.com/resource-center/blog/trevipay-and-allianz-trade-announce-strategic-partnership-to-enhance-b2b-risk-management-and-underwriting-solutions/.

​

French businesses are experiencing increased payment delays and rising insolvencies. Coface's latest survey on payment behavior in France shows that 85% of companies (82% in 2023) have experienced payment delays, with the majority indicating that they are longer (51 days compared to 48.2 days last year) and more numerous. Although no sector has been spared, the automotive, energy, pharmaceuticals, agri-food, financial services and construction sectors have been particularly hard hit, with more than 25% of companies in these sectors reporting delays of more than two months. This deterioration in payment behavior is also reflected in a rise in insolvencies, which have now stabilised at much higher levels than in 2019 and 2023. 39,506 insolvencies were recorded in the first seven months of the year, up 23% on 2023 and 26% on 2019. Businesses with sales of less than €250,000 are the hardest hit, accounting for 87% of insolvencies. To read Coface's news release, go to https://www.coface.com/news-economy-and-insights/increased-payment-delays-for-french-businesses-amid-growing-social-and-political-risks.

​

The global insolvency surge isn't over just yet. Atradius' latest Insolvency Outlook, September 2024, forecasts a 23% increase in global insolvencies in 2024, with significant increases in countries adjusting from low insolvency levels or experiencing spikes, such as Australia, New Zealand, Sweden, Canada, the Netherlands, and the US. Denmark is the only country with a substantial decrease. Of the twenty-nine markets that Atradius monitors in this report, twenty-three have adjusted fully to normal (i.e., their insolvency level is at least 95% of  2019's level) or are overshooting their pre-pandemic insolvency levels. The picture for 2025 is more stable, with insolvencies set to decrease slightly by 3% globally, reflecting decreases in Europe and Asia Pacific. To read Atradius' Insolvency Outlook, go to https://group.atradius.com/publications/economic-research/insolvency-forecasts-september-2024.html.

​

16% of German companies report ultra-long overdue payments that have a share of 2% or more of their annual turnover (+7pts vs 2023). Coface's latest survey on corporate payment experience in Germany shows that, although the payment behaviour of German companies remains stable, the increase growing credit risks out of accumulated overdue payment and the pessimism of German companies about their current situation is striking.16% of German companies reported ultra-long overdue payments that have a share of 2% or more of their annual turnover (+7pts vs 2023). Coface's experience suggests that 80% of these overdue payments are globally never paid back. In addition, 48% of German companies indicated that their current business situation deteriorated between 2023 and 2024, while only 9% reported an improvement. The companies’ sentiment is now more pessimistic than after the beginning of the pandemic or the start of the war in Ukraine. To read Coface's news release, go to https://www.coface.com/news-economy-and-insights/germany-corporate-payment-survey-2024-simmering-under-the-lid.

​

Steady (not stellar) global growth ahead at +2.8% until 2026, in line with the long-term average. Allianz Trade's latest Economic Outlook predicts global growth of +2.8% until 2026, with the US economy  slowing (growth of +1.7% in 2025 and +2.2% in 2026) but remaining the main support to the global economy in 2024. Momentum is gradually building in Europe, and Allianz Trade expects growth to increase to +1.4% in 2025-26, slightly above potential. However, Germany will remain in recession for a second year in a row, with growth expected to bottom out in late 2024, supported by the recovery in global trade and easing monetary and financial conditions finally driving up domestic demand. The Chinese economy remains in a slowdown but further monetary easing along with accelerating fiscal spending in the coming quarters should bring China’s GDP growth close to the official target of "around +5%" in 2024, and it should remain above +4% in 2025-26. To read Allianz Trade's news release, with a link to the report, go to https://www.allianz-trade.com/en_global/news-insights/economic-insights/economic-outlook-2024-2026.html.

​​​

VIDEO: How credit insurance has become essential in enabling trade finance to function at scale. To learn more about thow credit insurance providets are adapting to evolving trade finance demands, Trade Finance Global (TFG) spoke with Marcus Miller, Managing Director, Global Lenders Solutions Group Leader, Credit Specialties, and Marie-Aude Vesval, Global Unfunded Risk Participation Leader, Credit Specialties at Marsh. The experts noted that credit insurance and financial institutions are adapting through regulatory compliance, risk distribution, and innovative tools like  MRPAs (Master Risk Participation Agreements). As a result, "credit insurance, once a niche product, has become essential in enabling trade finance to function at scale, even in the face of regulatory pressures and market volatility." To watch the video, go to https://www.tradefinanceglobal.com/posts/video-how-credit-insurance-providers-are-adapting-to-evolving-trade-finance-demands/.

​

VIDEO: How trade credit insurance can provide Irish companies with "peace of mind". James Riordan, General Manager of Credit Risk Brokers and newly elected Executive Board Member to Farosol Credit Management Services, is interviewed by Declan Flood for the 'Excellence in Credit' Series. As part of the inteview, James provides an overview of the trade credit insurance sector in Ireland and how the product provides "peace of mind". He also explores some of the risks facing the trade credit insurance sector, examines the current claims situation in Ireland and describes how Credit Risk Brokers use their relationships within their international network Farosol to add value to their client servicing. Declan suggests that the take up rate for credit insurance in Ireland is internationally low, although "but from a risk mitigion perspective, to me it's one of the greatest tools." To watch the video, go to https://www.youtube.com/watch?v=Eh3k44pLfCg.

​

VIDEO: What trade credit insurance is and why it’s vital for international business. CollectCo Connection has published a podcast in which Chris Walcher, Senior Director of Sales at CollectCo interviews Matt Allison, Credit Consultant at Allianz Trade In North America. Key topics covered include: What trade credit insurance is and why it’s vital for international business; How trade credit insurance protects your business from the risks of extending credit; The critical role of due diligence in assessing new business partners; Evaluating the financial stability of potential international partners; The impact of global economic conditions on trade credit insurance; Common mistakes businesses make when extending credit internationally. To listen, go to https://www.youtube.com/watch?v=cEDzbEgEUdQ.

​

The BUlletin October 2024. Berne Union had published its October BUlletin. This issue explores how ECAs are incorporating ESG, climate, and sustainability considerations into their mandates. Topics include climate risk management models used in building resilient portfolios, the challenges of attracting renewable energy investments in Africa, innovative partnerships for sustainable projects, and support for e-commerce SMEs. In addition,  subject matter experts discuss the implications of changing credit cycles for the leveraged finance market and the importance of adhering to claim provisions in insurance contracts. To read the newsletter go to https://www.berneunion.org/Newsletter.
 

​

Shorts

60 Seconds With... Allianz Trade's Steve Bramall. Insurance Post has published an article with Steve Bramall, Credit Director of Allianz Trade UK & Ireland, in which we learn that Steve would like to replace Daniel Craig as 007 and can't live without Facetime. Go to https://www.postonline.co.uk/commercial/7955966/60-seconds-with-allianzs-steve-bramall to read the article.

​​

How single contract credit insurance plugs the million-pound SME business gap – Allianz Trade. Richard Miller, head of mid-term for Northern Europe at Allianz Trade, discusses a solution to the growing SME insurance gap.
https://www.insurancetimes.co.uk/expert-views/how-single-contract-credit-insurance-plugs-the-million-pound-sme-business-gap-allianz-trade/1453066.article.

​

​

Congratuations to . . .

All the nominees for Women in Credit Insurance Awards. Over 100 nominations were received in total, including:

• Trailblazer Award: For a woman who has pioneered new methods, strategies, or approaches in credit insurance, setting a new standard in the industry. Nominees include: Delphine Leprince (Allianz Trade), Danielle Cousins (EFCIS), Nikki Salmon (FinCred)

• Leadership Excellence Award:  Honoring a woman who has demonstrated exceptional leadership skills and has significantly impacted her organization or the credit insurance industry. Nominees include: Corine Troncy (AIG), Ana Dieguez (Aon), Kerlijne Van Steen (Credendo).

• Innovation in Credit Insurance Award: For a woman who has developed innovative solutions or products that have significantly advanced the field of credit insurance. Nominees include: Ewa Rose (Bondaval), Ozlem Ozuner (Allianz Trade), Zoe Butcher (Allianz Trade).

• Rising Star Award: Aimed at recognising an up-and-coming female professional who shows exceptional promise in the field of credit insurance. Nominees include: Chantal Castagna (Aon), Emma Clarke (Allianz Trade), Brenda De Lucena (WTW).

• Outstanding Mentor Award: For a woman who has dedicated significant effort to mentoring and supporting other women in the credit insurance industry. Nominees include: Jennifer Donaghy (WTW), Karen Lawson (Coface), Jane Hull (TMHCC).

• Community Impact Award: Recognizing a woman whose work in credit insurance has had a substantial positive impact on the community or society at large. Nominees include: Claire Humphreys (Allianz Trade), Isabel Garcia, (Allianz Trade), Iveta Terefenkova (Allianz Trade).

• Lifetime Achievement Award: Honouring a woman who has had a long and impactful career in credit insurance, serving as a role model for future generations. Nominees include: Susan Ross (Aon), Jane Wyatt (Coface), Corine Troncy (AIG, Ewa Rose (Bondaval).

• Diversity and Inclusion Champion Award: For a woman who has actively worked to promote diversityand inclusion within the credit insurance sector. Nominees include: Linda Smith (Allianz Trade), Sally Nolan.

The awards ceremony is on 21 November and is hosted by Howden. 

​

Company Watch: G2 has recognised Company Watch as a High Performing Financial Risk Management Platform in their Fall 2024 Report. 

​

Credendo: Credendo has been recognised as one of the top 1% of all employers in Belgium and received the Leading Employers 2024 award. 

​​​​​​