Credit limits

Closure of the state support schemes

  • The existence of state support reinsurance schemes initially raised concerns of a potential cliff edge of future support when these ended on 30 June 2021, but through close dialogue with governments, Insurers have been able to prepare for this process throughout the first quarter of 2021.
  • State support schemes can be viewed as a successful fiscal strategy during these exceptional times. It is estimated that failure to implement state support schemes could have resulted in exposures being reduced by between 20-25% across most portfolios. A level only previously seen during the financial crisis of 2008.

Approval trends

  • Insurers have actively managed exposures across their portfolios. Where new information has become available, insurers have been able to review and re-underwrite credit limits previously reliant on government support schemes.
  • Information provided by the three largest insurers reports approval rates and coverage acceptances are reverting back to pre-pandemic levels.

Risk action

  • Insurers continue to review financial information in order to increase acceptance rates. This will continue throughout 2021 as more financial information becomes available and the legacy data contained within financial statements expires.

Next steps

  • The provision of new financial information to insurers is key to them reassessing their position and overcoming any shortfalls in coverage.
  • Aon’s ‘closing the gap’ methodology and advanced in-house systems have assisted clients throughout the pandemic, and been at the forefront of limit enhancement successes throughout 2020 and 2021, achieving over USD 550MN in additional cover for clients.
  • Our experienced Credit Solutions teams are available to assist you along the way by identifying and managing uninsured exposures, closing the gap between insured risk and uninsured risk for more comprehensive coverage. Our approach incorporates i) insurer negotiations, ii) credit risk analysis, iii) data analytics and iv) product innovation.

Regional acceptance rates

Source: Aon TradingDesk

Sector acceptance rates

Source: Aon TradingDesk Insights