Global trends

  • Overall for 2020, The International Credit Insurance & Surety Association (ICISA) claims ratio increased from 48% to 60% and above-average since the Global Financial Crisis of 2008/9. Loss ratios were elevated in early 2020 linked to pre-COVID-19 incurred losses and some severity claims that occurred but these ratios reduced markedly as 2020 progressed.
  • Insurer financial results so far 2021 demonstrate a continuing low level of loss trend from H2 2020. The scale and concentration of the largest trade credit carriers risk exposures in Western Europe and support measures taken by governments in these countries to protect their economies are directly reflected in the reported loss ratios and also reflected in Aon’s commentary for these countries.
  • The Berne Union in fact reported a high year of claims paid in 2020, linked to medium-term emerging-market losses supported by Export Credit Agencies, but also hard-hit sectors in the short-term market like transportation. Overall the frequency and severity of losses in short term trade credit so far in 2021 remain at low levels.
  • With corporate insolvencies levels at artificial lows then claims are now expected to emerge in H2 2021 and into 2022. In contrast to the 2008 GFC where there was a spike in insolvencies immediately related to the credit crunch, then “COVID-19” related claims may in fact more gradually materialise coupled with an expected uneven global economic recovery in terms of time and geography.
  • Export Credit Agencies are reporting for medium/long-term exposures growing non-payments indicating that future claims may materialise and also linked to heightened political risks elements for a number of emerging markets.
  • In 2021 we are already reporting increased insolvency levels in Germany and Spain specifically, with creeping defaults starting to materialise elsewhere and a heightened expectation of shock severity losses to follow.