Credit Insurance News   

Major trade credit insurers record combined ratios of around 70% and remain "very profitable". WTW's latest European Insurance Market Update Q4 2023, which assesses the insurance market across all major lines of business in Europe, has advised that, following a period of low claims, trade credit insurers now expect a gradual increase in bankruptcies towards more normalised levels. While the frequency of claims increased in 2023 to close to pre-COVID levels, the severity of claims remained below average, and insurers continued to enjoy low loss ratios. Major trade credit insurers recorded combined ratios around the 70% mark and remained "very profitable". WTW also noted that insurers remained selective on buyers with lower financial ratings and certain sectors with higher claims levels, such as the construction or retail sectors. In 2024, WTW expects credit appetite to continue to tighten. To read WTW's report, go to https://www.wtwco.com/en-ch/insights/2024/03/european-insurance-market-update-q4-2023.

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E-invoicing may be "a game-changer" for trade credit insurers. Tinubu has published an article examining how EU e-invoicing standards, which require invoices to be sent and received in a standardised, structured data format that provides for automatic data reading, are expected to reshape how trade credit insurers assess risks and tailor coverage. Tinubu comments that the credit insurance industry stands to benefit in several ways. However, the industry's real "game changer" could be that with "real-time data on insured parties, credit insurers would be able to assess risks and process claims at a faster pace than before." In addition, Tinubu believes that one of the most transformational outcomes of e-invoicing is its potential to usher in a new era of customised credit insurance solutions."With more granular, accurate data at their fingertips, credit insurers can design policies tailored to specific trading relationships and payment patterns." To read Tinubu's article, go to https://www.tinubu.com/blog/mandatory-eu-e-invoicing-5-transformative-benefits-for-credit-insurance.

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Coface launches a new strategic plan, Power the Core. "With the ambition to develop a global ecosystem of reference for credit risk management," Coface has launched Power the Core – a new strategic plan for 2024-2027. Coface advises that some of the aims of the new plan include consolidating and accentuating its historic credit insurance business, generating double-digit profitable growth for information services, and proactively investing in data and technologies – both for its credit insurance businesses and information services. The new plan will replace Coface's Build to Lead plan (announced in February 2020), which, over the period 2020-2023, reduced Coface's combined ratio to 69.1% – a level well below the plan's objectives, with revenue growth (driven by record customer retention and growth in policyholder turnover) reaching an average of 6% per year. To read Coface's news release, go to https://www.coface.com/news-economy-and-insights/coface-launches-its-2024-2027-strategic-plan-power-the-core.

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Allianz Trade introduces Allianz Trade pay. Allianz Trade has announced the launch of Allianz Trade pay, a payment solution that "aims to revamp how businesses manage their online transactions." Allianz Trade Pay offers various services dedicated to B2B e-commerce activities. These include an instant financing solution through Allianz Trade's partners, a digital buyer onboarding solution, an online fraud risk management and mitigation system, and trade credit insurance at checkout. Companies using a CMS can add a plugin to the source code of their B2B e-commerce platform. François Burtin, Global Head of e-commerce at Allianz Trade, commented: "With Allianz Trade pay, we are now covering the entire B2B e-commerce value chain, from KYB to payment, and addressing the needs of the whole ecosystem, from e-merchants to BNPL players, banks and marketplaces." To read the Allianz Trade news release, go to https://www.allianz-trade.com/en_global/news-insights/news/allianz-trade-pay-b2b-ecommerce.html.

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​Five false facts about trade credit insurance. Coface has published an article that examines and debunks some of the top false facts about credit insurance. The list includes: "Managing credit risk inhibits sales"; "Why on earth should I sign up to credit insurance? I know my clients really well . . . and for a long time!"; "Fraudsters only target large companies"; "Credit insurance is a high-cost solution that doesn't cover my needs" or "Self-insurance is cheaper!". To read Coface's article, go to https://www.coface.com/news-economy-and-insights/5-false-facts-about-trade-credit-insurance.

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78% of US credit professionals do not use trade credit insurance. A recent National Association of Credit Management (NACM) poll revealed that 78% of US credit professionals do not use trade credit insurance. According to the NACM, companies that rarely face bad debt think third-party insurers are not worth the premium, with some of the companies polled suggesting that credit insurance policies can be very complicated. Barry Hickman, Senior Director of Credit at Dal-Tile Corporation, commented: "One of the big disadvantages I find is that insurance puts a cap on a certain dollar value whether it's a portfolio or a single account, and if you go over that value, you are no longer insured." Hickman also suggested that insurance caps can limit quick-strike sales opportunities. "As a credit professional, when you begin to weigh the cost of credit insurance against the ability to make sound risk decisions on your own with the tools you have, it can become a lopsided opportunity or business decision." To read NACM's article, go to https://www.linkedin.com/pulse/how-when-use-trade-credit-insurance-nacm-national-8otqe/?trackingId=Z8FIBWVlSaSIZkA8fqTA7Q%3D%3D.

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The implications of Indonesia's regulatory shake-up on the trade credit insurance industry. Insurance Business America has reported that Indonesia's Financial Services Authority's plans to enact substantial increases in minimum equity requirements in Indonesia's insurance industry by the end of 2026 (with further elevations by the end of 2028) will impact insurers offering comprehensive product suites – including trade credit insurance. For example, Fitch Ratings has predicted that, although the anticipated impact of the new credit insurance regulations will be favourable for rated trade credit insurers, the expected adjustments in capital requirements for credit insurance providers may incentivise smaller insurers to "realign their focus away from this segment towards simpler product offerings." To read Insurance Business America's article, go to https://www.insurancebusinessmag.com/asia/news/breaking-news/indonesias-insurance-industry-braces-for-regulatory-shakeup-476026.aspx#.

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Webcast: 2024 Economic Forecast: Implications for political and trade credit risk. WTW's Sam Wilkin - Director of Political Risk Analytics (WTW Financial Solutions), Jérôme Jaeger – Head of Trade Credit (WTW Canada), Laura Burns – Political Risk Leader (WTW Americas), are joined by Jacqui Jooste – Country Manager and Chief Agent (Coface Canada) and Ruben Nizard – Economist North America & Head of Political Risk Analysis, to discuss the Canadian and global economic outlook for 2024 and the implications for political risk and trade credit underwriting. To listen to the recording, go to https://www.wtwco.com/en-ca/insights/2024/01/2024-economic-forecast-implications-for-political-and-trade-credit-risk.

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AU Group warns that business failures are making a "serious comeback". AU Group's latest G-Grade for Q1 2024 warns that, after two years of strong post-COVID growth (2021 and 2022) and a global economy boosted by various governments' support, 2023 was the year of a return to reality. "The debts incurred during the crisis have to be repaid, and there has been a catchup of insolvencies." In 2024, business failures worldwide are expected to rise by 10% worldwide (compared with 7% in 2023), and global GDP growth will remain low at around 2.3% (compared with 2.7% in 2023). This "soft" growth" will be accompanied by margins that will remain under pressure (with inflation still high) and financing conditions that will not ease until the 2nd half of 2024. To download AU Group's report, go to https://www.au-group.com/etudes/ggrade-q1-2024/.

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The UK is expected to see low growth of 0.5% in 2024, but we may see the beginnings of a recovery in the second half of the year. Coface's UK economist, Jonathan Steenberg, has published an article that warns that Coface's Q4 Barometer has found that trading risks for UK and Irish businesses have intensified due to weak economic growth, rising insolvencies and political uncertainties. The article examines if there will be any improvements this year, concluding that the UK is expected to see low growth of 0.5% in 2024. Steenberg hopes to see the beginnings of a recovery in the second half of the year, with UK insolvencies continuing to rise but at a lower rate. In Ireland, the domestic economy is also expected to grow, although insolvencies – which rose by almost 30% in 2023 – may see "the same story" in 2024. Coface's country risk rating for the UK is unchanged at A4 (reasonable), while Ireland remains at A3 (satisfactory). To read Coface's article, go to https://cofaceitfirst.co.uk/coface-q4-2023-barometer/.

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Mastering the legal landscape: insolvency framework whitepaper. Atradius has published a whitepaper that examines the intricacies of legal insolvency frameworks and describes the individual frameworks across Europe. According to the paper, the duration of insolvency proceedings mainly depends on the complexity of the case and the specific kind of proceedings. However, on average across Europe, regular insolvency proceedings may last five to ten years, with most administrations in the UK lasting between one and five years. Europe-wide, recovery prospects depend on the individual case and are very sector-specific. However, on average, the normal insolvency quota is in the one-digit range, while secured creditors, in particular suppliers having upfront agreed on comprehensive retention of title rights, often end up with recoveries of more than 40% of the original claim. To read Atradius' whitepaper, go to https://blog.atradius.co.uk/insolvency-framework-across-europe.  

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A third rise in business insolvencies will drive two out of three countries above their pre-pandemic levels. Allianz Trade's latest Global Insolvency Report notes that in 2023, three out of four countries recorded a rebound in business insolvencies, resulting in a +7% rise globally. Most countries saw a double-digit increase, with rises in the US (+40% in 2023), the Eurozone (+14%), the Netherlands (+52%), France (+35%) and Germany (+23%). In 2024, although Allianz Trade does not expect a tsunami of business insolvencies as recorded in the aftermath of the great financial crisis, it expects the catch-up to be noticeable in several countries – notably, the advanced economies of Europe. The largest increases are expected in the US (+28%), Spain (+28%) and the Netherlands (+31%), with two out of three countries recording insolvencies above their pre-pandemic number in 2024, up from half in 2023. To read Allianz Trade's news release, go to https://www.allianz-trade.com/en_global/news-insights/news/allianz-trade-insolvency-report1.html.

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Xenia's Broking suggests that the UK market is on a positive trajectory, though insolvencies remain high. Xenia Broking's latest UK Insolvency Analysis, March 2024, reports that whilst some economic indicators are now encouraging and the UK market is moving in a positive trajectory compared to previous years, insolvencies remain relatively high and overall business confidence remains subdued. In the four quarters ending Q4 2023, the company liquidation rate increased to 53.7 per 10,000 companies from 52.4 in Q3 2023, with construction-related insolvencies amounting to 18% of all insolvencies in the 12 months. Overall, there were 25,158 registered insolvencies in 2023, up 13,7% from 2022 and the highest number for 30 years. These figures included 20,577 creditors' voluntary liquidations – 9% higher than in 2022 and the highest number on record. To read Xenia's report, go to https://xeniabroking.com/news-and-insights/uk-insolvency-analysis-march-2024.

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UK businesses face ongoing economic pressure. Allianz Trade's latest Risk Barometer forecasts 2024 GDP growth of +0.6% in the UK (compared with +1.4% in the US and +0.8% in the Eurozone) and predicts that UK business insolvencies will grow +5% in 2024 and will be 35% higher this year than in 2019. Although compared with pre-pandemic times, Allianz Trade feels that many companies are now much better prepared for business interruption or supply chain events, it warns that smaller companies and those in specialist and high-value industries are more limited in what they can do to diversify their supply chains. The Barometer notes that the vast majority (98%) of insolvencies in Q3 2023 affected businesses with revenue under £1 million. To read Allianz Trade's news release, go to https://www.allianz-trade.com/en_GB/insights/economic-research/uk-businesses-face-ongoing-economic-pressure-allianz-risk-barometer.html. 

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The UK, Spain and Portugal's food and beverages sectors have a 'Poor' Outlook. Atradius' latest Food Industry Trends report predicts that the output of the global food and beverages sector will increase to 2.8% in 2024 and 3.1% in 2025. The outlook is 'Excellent' for South Korea and Taiwan and 'Good' for fifteen of the thirty-seven other countries assessed (including Australia, China, India and Ireland). However, Atradius warns that a major escalation of the Russia-Ukraine and/or the Israel-Hamas wars could lead to another energy and food price shock, raising the cost of inputs for producers and lead again to rising food inflation. The UK, Spain and Portugal are the only countries currently rated with a 'Poor' outlook, i.e., "the credit risk in the sector is relatively high / business performance in the sector is below its long-term trend." To read Atradius' news release, with a link to the full report, go to https://atradius.co.uk/reports/industry-trends-food-industry-trends-march-2024.html. 

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Coface reports flat net income and higher insurance revenue in 2023 results. Reinsurance News has reported that Coface's full-year 2023 results recorded flat net income at €240.5 million, underwriting income growth of more than 13% to €395.4 million, and a combined ratio (net of reinsurance) of 64.3%. Insurance revenue increased 2.9% year-on-year to €1.6 billion, as services revenue rose 9% to €309.2 million, resulting in total revenue growth of 3.8% to €1.9 billion. In terms of insurance revenue growth, Coface saw a rise in client activity in the first half of the year but adds that this fell into negative territory in the second half following a decline in inflation and the economic slowdown. The retention rate reached a record level of 93.1% and, boosted by increased demand, new business rose to €117 million – up €7 million compared to 2022. To read Reinsurance News' article, go to https://www.reinsurancene.ws/coface-reports-flat-net-income-higher-insurance-revenue-in-fy23-results/.

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Video: The Berne Union reflects on the important role of export credit as a promoter of sustainable economic development through trade. A recording of Berne Union's (BU) 90th Anniversary Stakeholder Event on 27 February is now available. As part of the event, a panel of BU members and industry partners explored some of the central themes impacting international trade today, implications for export credit and the role of the BU, including:

• Fair and open trade as a catalyst for economic growth

• Innovation from ECAs in response to economic challenges

• Climate as a catalyst for cooperation across international finance

• The rise of geopolitical risk and uncertainty

• Focus on the future: Developing technology and human potential

Prof. Andreas Klasen, Professor of International Business and ifTi Director at Offenburg University, Honorary Research Associate at Oxford University, and Vice President of the Berne Union from 2013 to 2014, moderated the conference.

To watch the recording go to https://www.berneunion.org/Articles/Details/845/BU90-Stakeholder-event-thank-you-for-helping-us-celebrate.

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Company Watch launches Payment Practices Data. Company Watch has announced a new addition to its platform with the introduction of Payment Practices Data, designed to empower businesses with insights (based on information gathered daily) into the payment behaviours of the companies they engage with. This includes the average time from the date of invoice receipt to the date cash is received by the supplier and the percentage of overdue payments, with graphs reflecting average days to pay and payment percentages for all published years. Unique derived data, including Days Taken to file, is also available, allowing users to see how companies perform against the mandatory 30-day requirement to file Payment Data and identify any breaches. In the UK alone, the Federation of Small Businesses reports at least 50,000 business closures annually are due to a systemic poor payment culture. To read Company Watch's news release, go to https://blog.companywatch.net/resources/payment-practices-now-available.

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Congratulations

February BUlletin: Celebrating 90 years of Berne Union. Berne Union is celebrating its 90th anniversary and the first BUlletin of 2024 with a vintage edition. Features range from their vision of the organisation's importance since 1934 "and its bright future" to the state of global infrastructure finance, Middle East risks in focus, and several articles on insurance and investment in Africa. To read the issue, go to https://www.berneunion.org//Publications/Details/78.

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Congratulations to Paul Humphreys, Managing Director of Paul Humphreys Credit Insurance Services Limited. Paul is marking two anniversaries: 30 years since he set up Claverley Hyde Financial Risks with Paul Moors and Marianne Day and 25 years since their MBO.

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Congratulations to National Credit Insurance Brokers for being among the awardees in the Insurance Business Australia Awards 2024 (Large Brokerage catagory).

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New Appointments

Allianz Trade in North America has promoted Fabio Bianchini to Regional Credit Director Americas at Allianz Trade for Multinationals. Fabio has been with Allianz Trade for ten years, and most recently worked as Regional Credit Intelligence Director Mediterranean, Africa & ME at Allianz Trade for Multinationals.

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Aon has announced that Suzanne Hughes has joined the company as Head of Credit Solutions, Ireland. Suzanne has over two decades of experience in credit insurance client and leadership roles, and, most recently, served as Head of Commercial and Client Services for WTW Ireland's trade credit business.

 

Atradius has appointed Imran Wahab as Senior Business Development Manager based in London. He joins Atradius from Moody's Analytics, where he was an Account Development Specialist. Before that, he worked for Allianz Trade (then Euler Hermes) for nearly five years.

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Bartlett Group has promoted Paul Evison from Trainee Account Handler to Account Handler. Paul joined Bartlett in January 2023 and is based in Leeds.

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FinCred has appointed Nikki Salmon as Associate Director. Nikki joins from Bridge Insurance Brokers where she was Trade Credit & Surety Client Director. During her career, Nikki has worked for PIB Group, ​Arthur J. Gallagher & Co, RK Harrison and Euler Hermes (now Allianz Trade).

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Marsh has promoted Matthew Mansfield to Assistant Vice President, based in Birmingham. Matthew has worked for Marsh for nearly five years and was previously a Client Advisor. 

 

PIB Insurance Brokers has promoted Tom Danson to Regional Managing Director, forming part of PIB's new UK Leadership Team for Specialty. Tom has been with PIB for more than three years and was previously Managing Director. Before that, Tom worked as Strategic Sales Director at Aon and Head of Commercial (Midlands) at Atradius.

 

Specialist Risk Group has appointed Philip Bradbury as Development Executive to help drive the growth of The Channel Partnership's trade credit division. Philip joins from PIB Insurance Brokers, where he was Business Development Manager. He has also worked for Aon as a Business Development Manager.

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Xenia Broking has appointed Mark McAllister as Head of Trade Credit Northern Ireland & the Republic of Ireland. Mark previously worked for ABL as Head of Trade Credit, and WTW as Head of Trade Credit Northern Ireland.