Bright spot: Trade credit insurance shines amid gloom
Trade credit insurance is emerging the victor amid global economic uncertainty. We speak to HENRIK VALENTIN of IMC Newbury Trade Credit Solutions and KIRK CHEESMAN of National Credit Insurance on why times are good in some areas of insurance.
Video transcript below:
Donna Sawyer, Insurance Business
Donna Sawyer: As the global economy hurtles towards another meltdown, it’s not all doom and gloom in the insurance business. In fact if you are a Trade Credit Insurance specialist, things are looking up. Kirk Cheesman of National Credit Insurance says global economic volatility opens doors for insurance brokers.
Kirk Cheesman, National Credit Insurance
Kirk Cheesman: Well given the current market conditions, the future for trade credit insurance brokers is probably looking very rosy, specially for new business development. And the Australian industry is very still infant in trade credit insurance. It amazes me, I still go to creditors meetings and many businesses don’t even know that the product exists. So it’s all about getting out and educating businesses in Australia that this product does exist and there is a way of mitigating a bad debt.
Henrik Valentin, IMC Newbury Trade Credit Solutions
Henrik Valentin: We have record level of insolvencies, therefore you have trade credit insurance is something that is becoming more and more used by companies [out there].
Donna Sawyer: Henrik Valentin of IMC Newbury says the number of insolvencies in Australia now exceeds levels at the height of the GFC and that shows just how important trade credit insurance is.
Henrik Valentin: It’s been a trend for sometime. The GFC we saw a short period of concentration of insolvencies, but that trend has continued and we now got high insolvency numbers than during the GFC and it’s particularly in this, while there has been some large well known insolvencies. Kell and Rigby is a recent one that’s about to head in there, we have had Wow Electrical and there’s been a number of the larger insolvencies recently but it is a volume of small to medium size companies that are becoming insolvent.
Donna Sawyer: Although trade credit insurance is an emerging business opportunity it’s not for the faint hearted. Kirk Cheesman of National Credit Insurance warns it’s an area suited to specialists only.
Kirk Cheesman: Trade credit insurance is really a specialised and very unique product. So my belief is that it actually doesn’t sit alongside many other products at all, it is a speciality product and it really should be dealt with by a speciality broker.
Henrik Valentin: It’s very different from typical and general insurance where you take an insurance policy and often they just sit there until there might be a claim or you renew the policy. Trade credit insurance deals with business customers or the debtors and is ever changing. You know you have new customers, you have claims, this has a lot of claims at the moment, you have increase of credit limit, decrease and there is monthly compliance requirements. There is a lot of compliance around a trade credit insurance policy that you must follow or you don’t get a claim paid.
Donna Sawyer: This is Donna Sawyer reporting for Insurance Business.