Magazine article Business Credit

Credit Insurers See Trend of Higher Claims, Lower Premiums

Magazine article Business Credit

Credit Insurers See Trend of Higher Claims, Lower Premiums

Article excerpt

Trade credit insurers may have reached an inflection point in 2015, whereby claims hit their highest level since the recession and total premiums to the insurers declined for the first time in years.

Loss activity has reached a peak not seen since 2008, which reflects uncertainty and trade risk on a global scale, noted William Clark, of credit insurer AIG in a report (the 2016 Yearbook) produced by Berne Union (also known as the International Union of Credit and Investment Insurers). Global risks--such as weakness in the commodities markets, the Brexit, political turmoil in the Middle East and an economic slowdown in China--are contributing to an increase in losses for credit insurers, Clark explained. "Berne Union statistics show that short-term credit insurers paid $2.58 billion in claims in 2015, up from $2 billion in 2014, with significant increases in claims paid in markets such as Brazil, Russia, Saudi Arabia, Hong Kong and Mexico."

In 2016, larger insurers have reported increasing or flat loss ratios, which reflect a bump in claims frequency and severity in several markets. For example, the Association of British Insurers said insurers paid 150 million pounds in 2015 for claims related to customer insolvency, a 42% increase over the previous year, Clark said. …

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