Credit insurers withdraw cover as reinsurance rates spiral
Global credit insurers are withdrawing cover as they face big rises in their reinsurance premiums.
UK media reports say credit insurers are axing cover across whole industry sectors rather than engage in individual risk analysis, as credit loss ratios climb to more than 70%.
The abandonment of cover has jeopardised continued trading for otherwise healthy companies, the reports claim.
In Australia, NCI National Marketing Manager Terry Duffy says one local insurer has engaged in blanket withdrawal of cover, which is hurting some companies.
“It does affect supply lines, and some firms use credit insurance as a form of security, so withdrawal raises issues with their bankers,” he said. “When that insurance cover is withdrawn there are implications for their banking arrangements.”
UK newspaper the Financial Times reported last week that several big industrial companies have had to provide credit or even buy suppliers which were unable to source credit from banks and cover from insurers.
But Mr Duffy told insuranceNEWS.com.au most local credit insurers have responded positively to tough conditions.
“The main insurers have taken a pragmatic approach and are looking after existing clients,” he said.
“It has been said that credit insurance claims are at record levels. Insurance rates have been very low for the last four years and are now returning to reasonable levels,” he said.
UK media reports say credit insurers are axing cover across whole industry sectors rather than engage in individual risk analysis, as credit loss ratios climb to more than 70%.
The abandonment of cover has jeopardised continued trading for otherwise healthy companies, the reports claim.
In Australia, NCI National Marketing Manager Terry Duffy says one local insurer has engaged in blanket withdrawal of cover, which is hurting some companies.
“It does affect supply lines, and some firms use credit insurance as a form of security, so withdrawal raises issues with their bankers,” he said. “When that insurance cover is withdrawn there are implications for their banking arrangements.”
UK newspaper the Financial Times reported last week that several big industrial companies have had to provide credit or even buy suppliers which were unable to source credit from banks and cover from insurers.
But Mr Duffy told insuranceNEWS.com.au most local credit insurers have responded positively to tough conditions.
“The main insurers have taken a pragmatic approach and are looking after existing clients,” he said.
“It has been said that credit insurance claims are at record levels. Insurance rates have been very low for the last four years and are now returning to reasonable levels,” he said.