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Uncertainty: the new revolution in trade credit insurance

Uncertainty: the new revolution in trade credit insurance | Insurance Business

Uncertainty: the new revolution in trade credit insurance

Technology and innovation; two major influences which have shaken up the trade credit insurance industry over the last decade. But, there’s another factor which is having a far greater impact in shaping the industry: uncertainty.

Uncertainty has almost become the only certainty in today’s economy, fuelled by a catalogue of events which share a single adjective - “unpredictable.” Brexit, a potential trade war, China’s hard landing and the longest government shutdown in US history; it seems that each day brings us something new and unexpected. The concern is the effect this has on economic growth and the ability of businesses to trade successfully and with confidence.

Unfortunately, a solid economy is rarely built upon uncertain ground, which is why we’ve seen sluggish growth and an economic climate which is once again rocked by insolvencies. The latest statistics reveal corporate insolvencies in 2018 were up 10% year on year, equating to 44 a day. And with no real clarity on what the UK will look like post-Brexit, uncertainty is on course to continue its long reign, creating an almost impossible environment for businesses for whom trade is a lifeline to survival.

While this may present a challenge to the trade credit insurance industry, it also presents a valuable opportunity. Businesses obviously need to continue trading and it is our job to support them. Uncertainty has already led to an increased awareness of trade credit risks, resulting in a rise in demand for protection. It is therefore over to us as insurers and brokers to respond and demonstrate our worth, allowing us to drive a revolution in the industry.

Pinnacle to business success is a robust trading strategy; ensuring you’re trading in the right places, with the right customers, with the right product or service and with the right risk protection. Working collaboratively, insurers and brokers can play a pivotal role in developing this strategy with clients. In the past, trade credit insurance was often glossed over as simply a tick-box exercise, brought into play maybe to satisfy a lender or shareholder and only called upon as a last resort should trouble arise. However, with unique insight into global trading patterns, market conditions, payment behaviours and credit risk, we are in prime position to fulfil a greater, more proactive role. We are increasingly becoming involved in a business’s trade journey from the beginning and, for the smartest, even earlier.

We’re often asked how we manage the risks associated with uncertainty, but our response is always the same; for us, risk is an inherent part of doing business, so uncertainty just becomes another risk to manage. Being well versed in identifying and mitigating risk, it’s very much business as usual. To stay on top of this, we need to continually review our products and services as well ensuring we can be flexible and responsive. At Atradius, this has included the introduction of a new credit management portal for customers to manage their policies and apply for new credit limits at any time and from any location. We’ve also created a new intelligence tool for customers which identifies risk, monitors performance and finds new business opportunities.

Trade credit insurance in the UK is a century old this year. It was first established in order to support businesses to trade in the aftermath of the Great War, a role it has been fulfilling ever since.

The above is a contributed opinion piece by Tanya Giles of leading trade credit insurer Atradius. The views expressed within the article are not necessarily those of Insurance Business.