Trade Credit Insurers Increase Exposures to over $225 Billion

June 11, 2012

Global trade credit insurers have increased their exposures in the sector by over €180 billion [$226.8 billion], despite the continuing unstable economic environment.

At a recent meeting in Singapore the members of the International Credit Insurance and Surety Association (ICISA) concentrated on “market and industry developments,” said the organization’s bulletin. Newly elected ICISA President Jim Davidson commented: “The industry has demonstrated ability to support clients in a continuing unstable economic environment.”

It is also attracting new entrants into the field from major insurers. XL Group Plc announced that it has received the go ahead to expand its Lloyd’s Syndicate 1209 operations to include political risk and trade credit coverage. XL has also expanded its operations in Singapore to cover the sector.

The ICISA also noted the following:
– Increase of trade credit exposure of 11 percent demonstrates the industry’s ability to support trade in the midst of an economic downturn
– ICISA trade credit insurance members report ongoing demand for cover with premium growth of 7 percent
– Claims increase of 30 percent point to a deteriorating risk environment
– Surety members report premium up by 10 percent
– Continued weakness in the construction sector and lack of public spending cause concern for the surety industry

Executive Director Robert Nijhout indicated that “the members expressed their concerns about a lack of financing by banks and the on-going uncertainty in Europe. ICISA members continue to show their commitment to meet their obligations and to pay when needed”.

Davidson added: “The industry’s risk appetite is clearly demonstrated by healthy growth while making the reported higher claims payments”. However Davidson emphasized his concerns about “the continuation of the deteriorating risk environment which is caused not in the least by the increasing restricted financing abilities for traders”.

He also indicated that surety members are worried about the developments in the construction industry and by a lack of surety legislation in certain countries.”

Source: International Credit Insurance and Surety Association

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