Aon's Credit Solutions Chief Broking Officer reviews Q2 and looks ahead in Q3

I am pleased to introduce our mid-year 2021 insights from Aon’s thought leaders related to trade credit insurance placements, claims, trends and market performance. This new digital format gives us the opportunity to share key information together with global and regional overviews to help inform discussions with clients.

As our interview with the Westcon-Comstor CFO brings to life, it is more important now than ever before to remain flexible and adaptable to the evolving COVID-19 landscape with continued issues of supply chain disruption, the prospect of future “grey swan” events and climate change all very much on the agenda.

Our Solution Spotlight focuses on Financing Solutions and emerging prominence of ESG led products.

Key themes

  • Although COVID-19 related claims have not materialised at anything like the expected levels, the market consensus is that these will emerge in late 2021 and into 2022 as government support measures taper off. Claims frequency will increase as “zombie” firms fail in the economic recovery and with a higher level of severity losses.
  • Notwithstanding the expiry of government reinsurance schemes, then insurer credit limit appetite and capacity has in fact expanded during H1 2021 with current risk acceptance rates at 2019 levels for many trade sectors. Certain “red” sectors of transportation and hospitality remain particularly challenging to underwrite.
  • The pricing environment has stabilised and the hardening trend experienced in H2 2020 has now moderated in H1 2021 linked to the more favourable market conditions.

Top tips for clients

  • Start renewal discussions early to enable the strategy to be clearly defined and thorough market negotiations to be completed. From our experience, establishing a clearly defined timeline underpins the process and provides accountability and transparency to all key participants.
  • Your data is key at each renewal. We will discuss your objectives with you and ensure that we collectively provide the most relevant information to the market in order to enable optimal solutions in terms of cost, coverage and service provisions.
  • Securing credit limits are critical at every renewal. The more clarity you can provide on your client base, including any seasonal volatility assists in identifying insurers that have the appetite and flexibility to meet your needs. We also recommend that key customers are highlighted to ensure prioritisation.
  • Take time to review the structure of your program with your Aon team as it should evolve with your business profile and strategy. Insurance policies can be adapted to reflect risk tolerance levels, both centrally and at a local level.
  • Flag any anticipated material change to your business in terms of geographical profile and business acquisitions as this can have an impact on policy terms as well as compliance considerations.
  • Credit insurance can often facilitate more favourable financing terms. Your Aon team can advise how this can be applied and the potential economic benefits.
  • Credit protection is one component of the Order-to-Cash cycle. As part of overall strategic planning sessions, Aon can make you aware of any relevant additional solutions that you may wish to consider.

In discussion with the Westcon-Comstor Chief Financial Officer

Westcon-Comstor is a specialist technology distributor with annual revenues that exceed US$3 billion. Westcon-Comstor works with leading vendors to bring solutions to market through a channel of partners.

Oliver Henderson

Chief Broking Officer

Aon's Credit Solutions