As an international business working in credit insurance and receivables finance, we talk to brokers and carriers every day across the UK, Europe and North America. The same themes come up: it’s tough out there. Too many players are chasing the same deals, putting downward pressure on price and squeezing commissions.

The numbers highlight both the scale of the opportunity and the potential for growth. ABI figures put the value of UK trade covered by credit insurance at a record £340 billion, across roughly 13,000 policies in force. While this represents a substantial book of business, policy numbers have remained broadly stable in recent years. The SME share of premium has also declined, from around 11% in 2007 to 6% by 2012. Globally, ICISA estimates that only about 14% of trade is insured,suggesting significant potential to extend coverage to more businesses. At the same time, pricing remains competitive, with many UK buyers paying well under 1% of insured turnover and rates of 0.1%–0.5% common for a well-spread debtor book. Together, these trends reinforce the importance of finding new opportunities for growth whilst retaining existing business more efficiently.

The simple deals are harder to win, yet customers often need significant support to manage their policies day to day. That can reduce the value brokers get from eachclient and make the relationship less secure. There is some room for manoeuvre with larger deals, but they are less common and often require more complex policy structures that are harder for both insureds and brokers to manage and maintain.

The Hidden Cost of Policy Administration
Despite the changes in the trade credit insurance (TCI) market in recent years, one area remains overlooked: the time and effort required to manage policies throughout their lifecycle. This affects insureds, brokers and carriers alike. Simplifying policy administration and making it easier to understand are also important to expanding the market and encouraging more businesses to use TCI.

One of the biggest challenges is connecting policy coverage to a business’s live sales position, in real time. Done well, this gives customers a clearer view of their day-to-day trading through the lens of their policy. They can monitor compliance and reporting deadlines, spot coverage gaps against orders and invoices as they arise, and address issues well before a claim is filed. That reduces the burden for everyone in the chain and builds confidence in the product.

Technology can help, and there are good solutions on the market, including improved API connectivity from several carriers. But how should an insured or broker proceed if it lacks significant in-house technology expertise, or needs a more flexible, carrier-independent view? Solutions like FGI’s TRUST platform aim to solve this problem.

Build or Buy? Making the Right Technology Investment
Any technology investment raises the buy-versus-build question. For some businesses, building their own tools and connecting ERP systems to carrier APIs works well. Advances in AI and development tools have made this easier for tech-enabled companies. But it is not right for everyone. Most businesses run lean, and whether you are a carrier, broker or policyholder, your focus is likely to be elsewhere.

What is often overlooked is the ongoing cost and risk of maintaining a solution and keeping it up to date. Buying an off-the-shelf product can avoid that burden, but it may mean having to fit your business around standard technology. Rather than feeling purpose-built, the product can feel imposed.

So, what is the right approach? At FGI we are proponents of the “buy” model, but only when it means working with experts who understand the market. The key is to work with the right people and focus on the areas where you genuinely differentiate.

 

Choosing the Right Technology Partner
So, what should you look for in a technology supplier? Choosing the right solution and the right partner can be daunting. There are plenty of providers to choose from, and AI has brought a new wave of developers to the market, not all of whom have a clear understanding of the problems they are trying to solve. When looking for a partner ask yourself these 4 key questions:

• Do they understand my business? A good supplier understands your world and can offer you advice not just on technology. The last thing you need to be doing as a busy business is explaining basic terms to a supplier.

• How committed are they to your market? Will they still be solving your problems in three, five or ten years, or will they have moved onto the next business line? In a market facing ever more disruption, it is important to choose a partner that is committed to the long haul and can help you meet the challenges of tomorrow as well as today.

• Are they open to a conversation, or just pitching product? Everyone is looking to sell, but good suppliers know that relationships come first and require long-term investment. Share your challenges. The right suppliers will always be interested in offering advice, not only when there is a sale at stake.

• Are they willing to prove value? Every business must cover its costs, but a supplier confident in its product should be willing to help you demonstrate value before you commit significant funding. If the proposal requires full payment upfront and a long tie-in, ask why.
   

Whatever approach you choose, the status quo will not hold. The pace of change, and market demand with it, is accelerating. The TCI market at the forefront of this change. The opportunities are significant for businesses that recognise the need to act. Those that do not will find the market increasingly challenging, like the proverbial frog slowly simmering in the pan.

If you would like to discuss technology change in TCI and the practical solutions available to brokers, insurers and policyholders today, please get in touch. We would welcome the conversation.