Global Credit Insurance Market

XYZ 2020-04-22 16:53

Industry Insights

Demand for credit insurance continues togrow as new markets open up and trade continues to become more global. However,the market is clearly cyclical, with a strong correlation with GDP. Creditinsurers faced weaker economic conditions that negatively affected theirunderwriting performance during 2014-2018.

The Covid-19 coronavirus outbreak thatbegan in China towards the end of last year has now become a global pandemic.Although it now appears to be slowing in China, the spread of the disease isaccelerating elsewhere, with the World Health Organization recently describingEurope as its current `epicentre'. Governments are reacting in ever moredramatic ways, closing borders, imposing lockdowns and travel restrictions,shutting schools and colleges, and banning mass gatherings such as sportingevents.

As the sudden economic stop related to thecoronavirus pandemic puts intense credit pressure on borrowers worldwide,credit conditions across regions are gloomy.

When risks of bankruptcies grow, creditinsurers tend to reduce coverage for future sales in countries that are mosthit.

AFTE last week said that some of membershad reported credit insurers were reducing cover in countries like Italy andSpain.

European Union states are giving guaranteesto credit insurers in a bid to keep coronavirus-hit companies afloat, as somefirms cut cover for trade involving bloc members such as Italy and Spain,sources said.

 

Product Insights

Credit Insurance can bedefined as a commercial coverage against losses resultant of a failure ofoccupational mortgagors to pay their obligation to the insurer, usually due toliquidation. The coverage is geared to manufacturers, wholesalers, and serviceproviders who may be dependent on a few accounts and therefore could losesubstantial income in the event of a liquidation/insolvency. Credit insurancecan be categorized as an insurance policy shielding a company in the event thatit does not collect an unusually large amount of its accounts receivable. Acompany’s accounts receivable represents what it is owed on its credit sales.Every company that makes credit sales takes the risk that its customers willnot or cannot pay what they owe. Credit insurance is deliberated as one way toreduce this risk. Credit insurance is the overlapping field of coveringexporters against the risk they will not be paid for a range of reasons such aspolitical upheaval or simply default.

The credit insurance market is a hugemarket with low penetration. This market has a huge yet unrealized potential.Regulatory and insolvency frameworks vary widely between different countries,and although there is generally an upward trend in corporate insolvencies, thedifferences in frameworks and in reporting standards make comparison difficult.

 

Regional Insights

Geographically, the global Credit Insurancehas been segmented into Western Europe, Eastern Europe, North America, LatinAmerica, Middle East & Africa and Asia-Pacific. The Europe held the largestshare in the global Credit Insurance market, its revenue of global marketexceeds 48% in 2019. The next position is America. China and India have beingthe most populous country has fast growing Credit Insurance market.

Since the beginning of this year, due toCOVID-19, many governments have introduced financial support programs relatedto the credit insurance industry.

The German government and the country’scredit insurance industry have agreed to help to maintain insurance cover fortrade despite economic hardship related to the coronavirus outbreak, threepeople with knowledge of the plan said on Wednesday. Under the plan, thegovernment would guarantee up to 30 billion euros ($32.8 billion) for thecommercial credit insurance industry, the sources said.

 

Credit Insurance Market Share Insights

Three major groups – Euler Hermes, Atradiusand Coface and Sinosure – dominate the market internationally, with a combinedmarket share in 2019 of over 77%.

Some other major players are Zurich, CredendoGroup, QBE Insurance, Cesce and so on.

 

Without insurance, companies can bereluctant to buy or sell goods or services to others, with a rise ininsolvencies expected among European firms forced to halt operations due tolockdowns aimed at slowing the coronavirus pandemic’s spread.

Atradius, which like rivals Coface andEuler Hermes sells protection to companies against the risk of default by theircustomers, forecasts a 2.1% rise in insolvencies in western Europe this year,compared with a 0.2% fall in 2019.

Segments Covered in the Report

This report forecasts revenue growth atglobal, regional, and country levels and provides an analysis on the latestindustry trends and opportunities in each of the sub-segments from 2015 to 2026.For the purpose of this study, XYZ Research has segmented the global credit insurancemarket report on the basis of type, application and region:

Global Credit Insurance Market: TypeSegment Analysis

Domestic Trade

Export Trade

 

Global Credit Insurance Market:Application Segment Analysis