The global market for short-term trade credit insurance is worth more than $10 billion and its growth is being driven by non-European markets.
According to research published by Finaccord, a market research, publishing and consulting company specialising in financial services, the global market for short-term trade credit insurance was worth around $10.2 billion in gross written premiums in 2013. Finaccord expects this figure to rise to approximately $13.0 billion by 2017.
The report said: “As the markets for this type of cover in most European countries are stagnant or delivering very low growth rates, Finaccord expects major non-European economies to account for a rapidly rising proportion of the worldwide market for short-term trade credit cover (as opposed to long-term cover which is often monopolised by government-backed export credit agencies).”
It estimated that the fastest-growing market for short-term trade credit insurance between 2009 and 2013 was that of the Middle East (comprising Bahrain, Kuwait, Oman, Qatar, UAE and Saudi Arabia) with a compound annual growth rate of 38.2 percent, followed by China with 30.1 percent and Russia with 22.5 percent.
Although the Middle East and Russia continue to host relatively small markets that are growing quickly from a low base, the Chinese market for short-term trade credit insurance is already very well-developed, recording around $ 1.6 billion in gross written premiums in 2013.
"While the growth rates of trade credit insurance in certain major non-European markets signal excellent opportunities, it is important to understand which niches in these markets are accessible for commercial insurers. In some countries, including Brazil, China and India, the concept of taking out domestic trade credit insurance is actually more recent than the notion of acquiring trade credit protection for dealing with foreign business partners.
“Indeed, national markets for trade credit insurance have often been established by state-owned export credit insurers which, in the cases of China and India, for example, are still the dominant providers of the product,” said Bernd Bergmann, a consultant at Finaccord.
The report suggested that a change in the structure of the Chinese market is underway.
“A major development in China is the boom in domestic trade credit insurance which is forecast to grow at a compound annual rate of 24.1 percent between 2013 and 2017. This development opens up the opportunity for commercial insurers to gain a stronger presence in China,” said Bergmann.
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Finaccord, Europe, MENA, Asia-Pacific, Trade Credit Insurance