“Up until December last year, it was the hardest market I’ve ever seen in my 35 years.”
That was the assertion made by Kirk Cheesman (pictured) when Insurance Business caught up with the National Credit Insurance (Brokers) Pty Ltd (NCI) managing director to talk about one particular type of coverage.
A major risk management tool for businesses, trade credit insurance had not been spared from the effects of COVID-19 and the hard insurance market. This time last year, noted Cheesman, there was a lot of concern and fear among insurers amid the high levels of uncertainty.
“The main impact was a major review undertaken by the insurers on the immediate risks they saw with the lockdowns and non-trade of businesses,” said the MD. “At the same time, pricing also increased due to the perceived risk, and insurers stopped doing new business for a while as well.
“So, it was pretty major for a broker in those initial months from March through to September. From a new business perspective, trying to generate interest from the insurers was very difficult, and it was also very challenging in certain sectors to get them to renew policies where they had a poor loss ratio history.”
Some NCI clients, for instance, have had to pick different structures to take on more of the risk share, to get the insurer to renew their policy.
In Cheesman’s view, though, things are looking up, especially given the low level of claims compared to what was originally anticipated or modelled.
“Once the government stepped in,” he said, “in particular the protection mechanisms on insolvent trading for directors and the protection of wind-up notices being delayed, as well as the JobKeeper financial support, those had a big impact and stabilised things.
“Since the beginning of 2021, things have really changed dramatically. The insurers have opened up to new business again; the acceptance rate or approval rates on credit risks has grown and is much better; and they’re also more comfortable with the economy and, therefore, renewals have been better as well.”
As for the role of the specialist trade credit insurance broker, Cheesman highlighted NCI’s response during the particularly difficult times.
“You just kick into gear and you speak to your clients and you plan well ahead over renewal,” the broking boss told Insurance Business. “Our focus went straight back to our client base, and we spent all of our time with our existing clients in managing their requirements and their risks and fighting for them to get the cover they needed.
“Pretty much 100% of our focus and energy was spent on our existing client base, but undoubtedly we can’t do that forever. New business development is critical to a broker, so we’re happy that some of the insurers have now opened their doors to new business again, with the comfort levels returning regarding the economy.”