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European trade credit insurance claims expected to rise in 2014

By CreditMan Wednesday, June 18, 2014

Trade credit insurance claims are expected to rise in Europe, the Middle East and Africa (EMEA) throughout the remainder of 2014, as more firms across the region experience cashflow restrictions as a result of over-stretching themselves as they seek to capitalise on economic growth.

According to Marsh’s latest EMEA Trade Credit Quarterly Briefing, several countries experienced increased claim levels in first quarter of this year, following a continuous decline in the last three quarters of 2013. Marsh expects this trend in claims to peak within the next 12-18 months.

Tim Smith, Managing Director in Marsh’s International Trade Credit Practice, commented: “Both economy conditions and business confidence are improving across the EMEA region. However, despite these positive indicators, past experiences tell us that some businesses will financially over-stretch themselves in the period following a recession as they look to grow.

“At the same time, insurers are providing higher levels of cover for less premium amid continuing competition for attractive risks. We expect the level of claims to rise across EMEA this year, which may lead to insurers seeking higher rates for trade credit insurance in 2015, and beyond.”

According to Marsh’s report, premium rates are still highly competitive in those geographies and sectors where insurers are vying for good-quality, well managed risks, with more than 50% of Marsh’s clients experiencing reductions in Q1 this year.

Among the other conclusions of Marsh’s EMEA Trade Credit Quarterly Briefing are:

* In Western Europe, while cover levels are increasing in the majority of countries; there are still some trade sectors where cover is more restrictive, including paper/pulp, construction and electronics.
* Insurers are adopting a more cautious approach to cover levels in Eastern Europe, due in part to political uncertainties and the insolvency outlook.
* Conversely, in Turkey and Dubai, high levels of capacity and local competition are leading to firms securing more competitive terms on renewal.
* Insurers are becoming more cautious in South Africa in the wake of increasing insolvencies.


About Marsh

Marsh is a global leader in insurance broking and risk management. We help clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. We have approximately 27,000 colleagues working together to serve clients in more than 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and human capital. With more than 54,000 employees worldwide and approximately $12 billion in annual revenue, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @MarshGlobal.