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Global trends on trade credit insurance

Global trends on trade credit insurance

Credit Guarantee | October 19, 2017

Trade credit insurance has been in the news recently – from emerging trends within this environment to an increase in the uptake in UK businesses, and the top concerns businesses have with operating globally. This article explores the most recent global news and trends and how your company can protect its bottom line in light of this.

UK Small Businesses See An Uptake In Trade Credit Insurance

The Association of British Insurers (ABI)1 in the UK recently published a news release with statistics portraying the growth of trade credit insurance, particularly in small businesses.

Their figures show that two years ago, small businesses made up 40% of the total claims made to trade credit insurers. This was a marked increase of 25% on the previous year (19% more than average), showing that more small businesses are making use of trade credit insurance.

This type of insurance continues to represent good value for small businesses who received a quarter (25%) of the total value of claims paid, but pay just 15% of the total premium! In addition, ABI’s figures show that nearly 60% of trade credit insurance policies sold last year, were taken out by SME’s.

“Trade credit insurance is crucial for all businesses to help them navigate potential risks. In particular, SMEs looking to grow can have confidence that a trade credit insurance policy will help them to do this whilst guarding against the unexpected,” reported ABI Manager for General Insurance, Mark Shepherd.

Say you want to conduct business on a credit basis, with a customer, it would be prudent to consider trade credit insurance, particularly if it is an unknown customer, high risk or volatile economic climate. Trade credit insurance can help you improve the profitability of your business.

We believe small businesses and entrepreneurs are the future of Africa’s economic stability, hence we support their future of Small Businesses in Africa.

Companies Worry About The Effect Of Business Interruption On Their Bottom Line

According to CFO Innovation 2, companies currently trading globally have shown concern brought on by several reasons.

The top concerns of trading globally include:

  • The unpredictable business environment particularly where markets are volatile
  • Political upheavals and terrorism
  • Cyber risks such as cybercrime and other digital breeches
  • Natural disasters
  • Losses caused by business interruption

Companies ranked business interruption as the lead threat, volatile markets came in second place and cyber threats was third on the list globally. It is interesting to note however, that cyber threats rose to second place across the Americas and Europe and the top risk in Germany, the Netherlands, South Africa and the UK.

In order to anticipate any sudden changes of rules that could impact markets, your company will need to invest more resources into better monitoring politics and policy-making around the world in 2017. Get expert assessments of credit and country risks with from Credit Guarantee and take advantage of these four benefits of international trade credit insurance.

Three Key Trends Observed In Trade Credit Insurance

The unstable economic environment, shows the concerns of companies today are founded. The AU Group 3 released their 2017 key trends where they find three key features:

  1. The unstable macroeconomic environment and the rise of country risk will influence corporates to secure their growth;
  2. Insurers will continue to adjust their risk appetites, especially in emerging markets; and
  3. “Digitalisation” keeps on concentrating investments in the industry.

Based on the above information, if your company is considering expanding into other countries, it’s important to consider markets that show positive economic growth, and not make the mistake of entering the volatile markets that could cost your company. As the trend is going, companies are aligning their risk appetites in emerging markets, so it is important to get sound research that will support your business decision-making procedures.

Dealing with both local and foreign buyers could be risky and lead to profit loss or even a non-payment that might cause your company to shut its doors. You need to mitigate your risks today. Protect your bottom line and get cover against loss of proceeds by foreign debtors with international trade credit insurance from Credit Guarantee.

Credit Guarantee is a licensed FSP.

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