Covid-19 pandemic has affected all the businesses. Despite positive news on the vaccine front, the Covid-19 continues to wreak havoc on businesses and their supply chains and economic forecasts remain gloomy for 2021.

At the same time, the reliance on trade credit insurance is increasing, and yet capacity is tightening and the availability of cover for certain market participants is challenged. An increasing number of risks have become uninsurable in the strictest sense and underwriters have become more selective about the risks they write as a result of the global credit crisis and looming global recession.

Even a large increase in rates for renewals has been observed. Insurers quoting for current renewals differs vastly from the last set of renewals. Around 25-30% increase in rates has been noted. For new business, a definite hardening in the market has been witnessed.
According to Insolvency Services statistics, third quarter corporate insolvencies this year are 64.7 percent up on the same point last year.
The sectors which are the most risky at the moment are non-food retail and the automotive and construction sectors but as of now nothing can be commented for all other sectors as all sectors will struggle entering into a recession and the likelihood of a company surviving depends on its ability to face the unexpected.

The current crisis in the financial markets is bringing home the need to have accurate risk and information management procedures as a business. Credit insurers who have established themselves as followers and have been taking on the risks that others weren’t prepared to take may feel the pinch under the growing weight of corporate insolvencies.

Recession has put the credit insurance industry in a concerning situation where the demand for protection against supply chain failures has increased along with the number of corporate insolvencies.

While the increased global demand is being met by the credit insurance markets, the problem is essentially that the likelihood of some companies failing is simply too high and the risk becomes uninsurable.

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