The Federal Government is considering assistance for firms that are struggling to obtain short-term trade credit insurance within a tight global market.

Website ABC Rural last week reported the Australian wool industry has been particularly hard hit by a shortage in available cover, forced by a surge in unacceptable risk.

Trade Minister Simon Crean has promised to monitor the problem, which has affected a range of industries worldwide that rely on trade credit insurance.

insuranceNEWS.com.au understands some European fashion and textile clients are regarded as high risks, while local insurer QBE is understood to have cut back its exposure.

Brokers Marsh say rising insolvencies and higher claims have tightened capacity for credit insurance and representatives say Federal Government intervention could help.

“Although the global experience reveals a worse situation in the US and Europe, there is tighter capacity on a broad level,” Marsh Senior Account Executive Shelvin Narayan told insuranceNEWS.com.au.

He says clients in the wool industry are among those facing a typical premium increase of between 30-40%.

“Six months ago there was a lot more doom and gloom, and while a lot of that hasn’t materialised conditions are still tight,” he said. “But a lot of clients are willing to pay the price rises which follow years of lower rates.”

Last week the German Government announced a €7.5 billion ($12.7 billion) funding package to strengthen credit insurers with guarantees against payment defaults.

In July, Allianz-owned Euler Hermes negotiated a public-private arrangement in New Zealand incorporating a top-up layer of cover underwritten by the NZ Export Credit Office.

And today major international trade credit insurer Coface announced a loss of €103 million ($173.2 million).

See report in INTERNATIONAL.