Research

Insurance Marketplace Realities: Trade credit

2018 Spring Update on Commercial Insurance in North America

April 12, 2018

Price prediction

  Trend Range
Trade credit: No change or slightly up Flat to +5%

Key takeaway

While we see a harder market approaching, economic momentum in the U.S. may help soften the turn.

Countervailing forces make this a complex marketplace where conditions will vary by geographic and industry sectors.

Large losses and a struggling retail sector are putting pressure on insurers.

  • Large losses are impacting carriers, which is driving a tightening of their underwriting.
  • Buyers are having a more difficult time securing specific limits and coverage in certain countries.
  • As the market continues to harden, we will see higher rates and far more conservative responses from insurers. As combined ratios grow, we will see pricing increases, as well as limit, country and structural restrictions. This will likely be mitigated by insurer desire to protect market share.
  • With many retailers suffering through another difficult holiday shopping season, additional large and small bankruptcies will stress available trade credit capacity.
  • The stabilization of the oil and gas industry has insurers looking to expand programs in the energy sector.

Uncertainty is rising in Korea and the U.K. but easing in Latin America.

  • Uncertainty in the Korean Peninsula has increased demand for insurance protection for credit risks in the region.
  • As the U.K. struggles with Brexit, above-average credit insurance claims activity is expected to continue.
  • Insurers are increasing their risk appetite for Latin America credit exposures now that the economies of Brazil, Colombia and other area countries are trending up.
  • A brewing trade war with China and potential new tariffs will impact pricing and capacity in certain sectors.