Insurance Marketplace Realities 2024 Spring Update – Trade credit

Rate predictions: Trade credit

Trend	Range
	Flat to +5%

Insurers see less new business activity from traditional purchasers.

• Soft market pricing and appetite continue to dominate as applications have slowed and losses are low.
• Trade credit is a discretionary spend and becomes one of the first casualties as companies cut expenses.
• The lack of awareness of this key tool remains a major obstacle for growth.

Bank-driven programs remain the growth engine.

• Bank-driven programs continue to drive growth and provide insurers with exceptionally low loss experience.
• In trade finance, insurers have been open to offering groundbreaking innovation on policy language and structural offerings. It will only be a matter of time for these policy and structural innovations to move to the corporate sector.

The cost of capital is becoming a key factor in rate development.

• The increased cost of capital for U.S. financial institutions directly impacts the cost of capital for trade credit insurers.
• Insurers need to develop new models to better manage their capital while effectively servicing their clients.
• Low loss levels over the past 10+ years have led to a pricing floor based on capital return models.

Disclaimer

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