According to a 2023 global survey conducted by the IACPM (International Association of Credit Portfolio Managers) and ITFA (International Trade and Forfaiting Association), credit and political risk insurance (CPRI) continues to rank as the second most important market tool for credit risk mitigation. This appears consistent with our findings as the WTW insured portfolio grew by 25% in 2023, and it seems from the WTW 2024 Market Survey that the insurance industry is responding to this demand with increased capability and broader appetite.
On the demand side, an analysis of WTW’s in-house broking platform (which records data across the company from enquiry stage through to policy expiry, providing a global view of all our trading activities) corroborates the IACPM and ITFA survey as we saw a 35% increase in enquiry submissions in 2023; and on the supply side, this demand was being addressed as the total capacity available for transactional credit insurance is rising 17% in 2024 (following a similar rise in 2023).
The geopolitical landscape is forcing a market-wide flight to quality. At the same time, insurers are facing elevated reinsurance rates and an ever-increasing risk landscape. These factors combined means that insurance companies are looking to support lines of business where they see strong historical returns as well as product diversification. CPRI appears to be well positioned to receive insurance company management support. However, that support is not universal and is more focused on certain risk areas (notably credit and contract frustration) and for the first time in many years, we have seen a drop in capacity and tenor appetite for political risks.
Against this background of political and economic uncertainty, our annual survey shows that the insurance market has made a clear pivot away from emerging markets, and towards more developed economies. This is understandable as fiscal constraints and the spectre of losses continue to hang over emerging market economies. That is not to say that insurance markets are not supporting the mobilisation of capital, but this is increasingly done through the support of multilaterals.
The number of insurers in this space continues to grow year-on-year with a number of MGA’s and new entrants coming into the CPRI space. As the field becomes more crowded and more competitive, we are starting to see insurers specialize their offering to focus on sub-sets of the market, in order to retain market share and a competitive edge.
We hope you enjoy reading this report and find its contents useful. If you would like to find out how you can take greater advantage of current market capacity, or require further detail on the insurer appetite and capabilities highlighted in this report, please contact us.
| Title | File Type | File Size |
|---|---|---|
| Credit and Political Risk Insurance Capacity Survey and Market Update | 1.6 MB |
