Trade credit claims expected to rise
Trade credit insurance claims are expected to rise in Europe, the Middle East and Africa (EMEA) as an increasing amount of firms experience cashflow restrictions.
This is according to Marsh’s latest briefing, which found that more firms across the region are experiencing cashflow restrictions as a result of over-stretching themselves as they seek to capitalise on economic growth.
It reported that 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, said: “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 the 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 percent of Marsh’s clients experiencing reductions in Q1 this year.
