An XL Catlin survey has highlighted the growth potential for re/insurers’ credit risk lines, if carriers innovate and adapt products to match growing demand for more flexible and tailored cover.
Peter Schmidt, Chief Executive Asia Pacific, Latin America & Global Credit and Surety, XL Catlin, noted the current disconnect between firms’ needs and the policies available; “credit insurance buyers believe the current suite of products does not fully meet their protection needs and/or that policies are too rigidly applied.
“Meanwhile, larger companies would prefer to have the ability to differentiate between different types of risks.
“These results therefore suggest more flexible and tailored products may bring about new business opportunities for insurers and open access to previously untapped client segments.”
To expand in the credit risk lines, re/insurers are advised to reduce product complexity, enhance client servicing, improve the reliability of credit insurance solutions and adopt a more bespoke approach to pricing.
“We are encouraged by these findings, which highlight several opportunities to grow the credit insurance market, and therefore provide additional protection to policyholders and support them in expanding their franchises,” said Schmidt.
Credit insurance is becoming increasingly relevant in a world with growing economic and political uncertainty.
Although it’s often been used to protect firm’s balance sheets against the threat of a default on trade receivables, it’s now often used as a proxy for a financial guarantee to help policyholders gain access to bank lending and optimise their working capital needs.
Thus identifying specific areas where credit insurance products could be adapted to suit changing market needs could repay re/insurers with demand that expands beyond its current scale and scope.
