Carrier financial results & credit insurance market update

Loss Ratio evolution

Insurer results are based on 2019-21 company financial reporting, available industry information and Aon data.

* Cumulative

Combined Ratio evolution


Key carrier results

  • At this time in 2020, credit insurers anticipated a surge in claims related to the pandemic and instituted a range of measures that would support policyholders with contractual flexibility while at the same time curtailing risk exposure in vulnerable sectors and weaker buyers that were affected by the twin supply and demand shocks the global economy experienced. At the same time carriers re-evaluated their commercial strategy to reprice “risk” and “risk extenders” in policies whilst cautiously quoting new business. As it transpired the losses that carriers expected did not materialise and, by the end of 2020, the market had stabilised.
  • The low levels of loss trend has continued into 2021. Carrier financial reporting at end Q1 2021 show claims ratios now below historic norms and an artificial environment reflecting all measures taken by governments to support their economies. The expiry of these support measures during 2021 will happen at different speeds and times. Even though we do expect a future “normalisation” of loss ratios as insolvencies inevitably return, the impact and timing remains uncertain and not likely to impact carrier results until 2022. Insurers remain concerned at the level of “zombie” companies sustained only by government measures and the related tail of insolvencies that will appear as “normalisation” takes place.
  • At the same time, we are now seeing carriers adopt a much more pragmatic position on both their risk and commercial strategy better reflecting the current realities whilst these favourable conditions exist, and also recognising that the pricing environment needs to better match increased risks in weaker sectors and countries.

Coverage trends

  • The 2020 implementation of government reinsurance schemes in Western Europe provided a means to mitigate mass carrier risk actions whilst credit limit capacity in the market shrank by ~9% overall in 2020. These reductions were as much to reduce total potential exposure to more realistic and actual trading requirements as it was related to carrier-specific risk action.
  • The expiry of government reinsurance schemes at the end of June 2021 means that the market has worked hard to facilitate coverage continuity and improved appetite levels for clients for the vast proportion of any credit limits supported by these schemes both by value and in number. Limit capacity has increased and has returned to levels of exposure at the end of 2017 with this upward trend anticipated to continue in 2021.
  • Emerging from the crisis in H2 2021, we expect an increase in demand for credit capacity to satisfy inflationary pressures and the return of trade flows globally, but also a call for innovative capacity solutions from the market due to greater risk awareness of the likelihood of future defaults.
  • From a product innovation standpoint, there has been increased focus on Environmental, Social, and Governance (ESG) themes, with the launch of i) the Euler Hermes green credit insurance product which seeks to invest any premiums back into green investments as well as ii) a Managing General Agent (MGA) operation which focuses on providing credit insurance to renewable transactions in the project finance sector. We are also seeing credit insurers bringing ESG KPIs to the forefront of their country and buyer ratings.

Limit Capacity evolution

Insurer results are based on 2019-21 company financial reporting, available industry information and Aon data.

Trade Credit Insurance – Insured Exposure¹

Trade Credit Insurance – Premium, Claims, and Claims Ratio¹


ICISA and Berne Union Data

The International Credit Insurance & Surety Association (ICISA) current members account for over 95% of the world’s private market trade credit insurance business. For 2020 ICISA¹ reported:

  • Insured exposure decreased slightly to €2.4 trillion.
  • Premium written of €6.3 billion.
  • Claims ratio increased to 60% (48%) and significantly above average for the past 10 years to levels not seen since the Global Financial Crisis.

The Berne Union² is an international association of the global export credit and investment insurance industry consisting of Export Credit Agencies (ECAs), private insurers and multilateral members from 73 countries. For 2019 their total short-term export credit trade turnover covered was USD 2.26TN, with increases mainly due to commitments from ECAs. According to 2020 Berne Union data, last year did in fact end up being a year of high claims paid – with the total rising around 20%. However, that 20% rise stems from claims paid relating to medium/long-term (MLT) export credit and included many claims not directly related to COVID-19 but paid in 2020 incidentally. Berne Union’s members continue to expect claims paid to increase in the first half of 2021, evidenced by the development of increasing MLT arrears seen throughout 2020, and with concerns of an uneven recovery among different regions and countries which, together with an increase in debt levels globally, could result in claims paid in several countries as a knock-on impact of sovereign defaults and corporate bankruptcies.