Credit insurance under threat as providers retreat
The availability of credit insurance is under threat worldwide as major insurers retreat from a surge in unacceptable risk.
Coface Australia GM Christian Vollbehr told insuranceNEWS.com.au the typical claims ratio of 30-40% has more than doubled in Australia as the economic downturn has deepened.
“Claims increased during the first quarter last year and continued in quarters two and three,” he said. “In the last quarter they really skyrocketed.”
Credit insurance covers suppliers against failing to pay on goods and services. Claims increased 58% during the fourth quarter in the UK, and the British Government is considering stepping in to prop up the market using a public-private scheme.
British high street retail giants are among those affected by an unprecedented withdrawal of credit insurance by major insurers including Coface and Atradius.
Mr Vollbehr says while the penetration rate of credit insurance is much lower in Australia at less than 10%, similar trends are in play here.
“Australia has caught up with the rest of the world,” he said. “One issue before has been construction, and now another sector giving us a headache is mining. Capacity is really becoming tight, and that is driven by reinsurers who are facing elevated claims. They are dictating to insurers the risks they are willing to take.”
Mr Vollbehr says his company is taking a careful approach.
“Where there is good business to be done, we will assess at this point and we will continue to offer our product,” he said.
Coface Australia GM Christian Vollbehr told insuranceNEWS.com.au the typical claims ratio of 30-40% has more than doubled in Australia as the economic downturn has deepened.
“Claims increased during the first quarter last year and continued in quarters two and three,” he said. “In the last quarter they really skyrocketed.”
Credit insurance covers suppliers against failing to pay on goods and services. Claims increased 58% during the fourth quarter in the UK, and the British Government is considering stepping in to prop up the market using a public-private scheme.
British high street retail giants are among those affected by an unprecedented withdrawal of credit insurance by major insurers including Coface and Atradius.
Mr Vollbehr says while the penetration rate of credit insurance is much lower in Australia at less than 10%, similar trends are in play here.
“Australia has caught up with the rest of the world,” he said. “One issue before has been construction, and now another sector giving us a headache is mining. Capacity is really becoming tight, and that is driven by reinsurers who are facing elevated claims. They are dictating to insurers the risks they are willing to take.”
Mr Vollbehr says his company is taking a careful approach.
“Where there is good business to be done, we will assess at this point and we will continue to offer our product,” he said.