Skip to main content
Survey Report

Insurance Marketplace Realities 2022 – Trade credit

Credit, Political Risk and Terrorism
N/A

November 15, 2021

The trade credit market is softening. Given the lack of forecasted COVID-19 losses, rates are dropping on average of 5% to 10% and in some cases more for pristine deals.

Rate predictions

Rate predictions: Trade credit
  Trend Range
Better risks Decrease (Green triangle pointing down) -5% to -10%
Poor risks Neutral Increase (Purple triangle pointing up) Flat to +10%

Key takeaway

The trade credit market is softening. Given the lack of forecasted COVID-19 losses, rates are dropping on average of 5% to 10% and in some cases more for pristine deals.

The tsunami of pandemic-related losses never arrived.

  • The predicted trade credit losses never occurred, though insurers remain concerned that the discontinuation of government stimulus could result in increased claims.
  • Insurer loss ratios are much lower after loss reserve releases, which has created a strong bottom-line position for many insurers.
  • Premium rates are softening thanks to not only negligible losses but also lower policy retentions due to self-insurance.

Key carriers have exited the trade credit marketplace.

  • The impact of two major departures in particular will impact market capacity, but the extent of that impact remains to be seen. Over $20 billion of credit limit capacity is being removed from the market, so pricing may ultimately be affected significantly.
  • Remaining insurers are jockeying for the portfolios of these markets.
  • The movement of bank programs will depend on the capacity and appetite of new prospective insurers.

The collapse of Greensill Capital will impact monetization programs.

  • The rapid failure of the supply chain financial services company is almost certain to result in regulatory changes on disclosure and insurer retraction against asset managers.

Conditions are improving.

  • Rates are softening and will likely continue in this direction into 2022.
  • Insurer appetite for most sectors has returned to pre-COVID-19 positions.
  • Insurers are still conservative, however, in their approach to sectors most heavily impacted by COVID-19 (i.e., airlines).

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

Contact

Scott B. Ettien
Global Head of Trade Credit & Political Risks

Contact Us