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Trade Credit Insurance in the UK

  • October 2015
  • -
  • Finaccord
  • -
  • 28 pages

Trade Credit Insurance in the UK is a report about the market for trade credit cover in the UK. In addition to documenting the development of the market value from 2010 to 2014, the report also divides it for 2015 according to six key segmentations:

- between small customers with an annual turnover of less than EUR 5 million and larger insured entities with a turnover above this threshold;

- between single-risk and annual policies;

- between export and domestic trade credit insurance;

- for export trade credit insurance alone, between protection acquired for political risks and cover bought for business risks;

- between business underwritten by domestic insurers and that dealt with by underwriters based outside of the UK and with no branch in it;

- and between business intermediated by brokers and that underwritten directly.

Table Of Contents

Trade Credit Insurance in the UK
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
Rationale 3
Several factors underpin the rationale for the production of this study 3
There are several distribution channel options in addition to brokers 3
Globally, trade credit insurers cover over EUR 22 trillion of commercial credit exposures 3
The report provides a standardised analysis of important metrics for trade credit insurance 4
Methodology 4
Research program 4
Market data analysis 4
Definitions 5
Trade credit insurance 5
Single-risk and annual policies 5
Export and domestic policies 5
Political and business risks 6
Premiums 6
Abbreviations 6
Exchange rate 6
PartnerBASE 7
Finaccord 7
20 MARKET ANALYSIS 9
Introduction 9
Economic situation 9
Key regulations 9
Market size, growth and segmentation 10
In real terms, the value of the UK market for trade credit insurance slipped back between 2010 and 2014… 10
… with the number of corporate insolvencies also having declined 10
The value of cover sold to smaller customers may have increased between 2013 and 2015… 12
… although there has been little apparent change in the weight of single-risk policies within the total market 13
Demand for export trade credit insurance seems to have tapered off… 14
partly as a consequence of a decline in underlying exports in 2014 15
The proportion of the export trade credit insurance market due to political risk cover has remained stable 16
The overwhelming majority of business is dealt with by underwriters based in the UK itself… 17
and brokers dominate distribution albeit direct sales are not insignificant 18
Factoring as a complementary / substitute product 19
The value of the UK factoring market expanded by over 50% between 2010 and 2014 19
Underwriter utilisation by brokers and market shares 20
On average, brokers of trade credit cover work on a regular basis within between six and seven insurers… 20
… and seven underwriters are utilised in this manner by more than 60% of brokers surveyed 20
Although not especially large, the UK market for trade credit insurance is comparatively fragmented 21
Distribution channels 24
Numerous brokers compete in the UK trade credit insurance market… 24
… including a dozen that are entirely or mainly focused on this field 24
Among banks, only HSBC has a clearly articulated distribution agreement for trade credit insurance… 25
… although many trade associations offer it… 26
… utilising a variety of operating models for this purpose 26

Future outlook 28
A number of factors threaten to limit growth in the market value through to 2018 28
LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Key market data for trade credit insurance in the UK 2
10 INTRODUCTION 3
20 MARKET ANALYSIS 9
Gross written premiums for trade credit insurance in the UK, 2010 to 2014 11
Gross written premiums for trade credit insurance in the UK, segmented by annual turnover of insured company, 2013 and 2015 12
Gross written premiums for trade credit insurance in the UK, segmented between annual and single-risk policies, 2013 and 2015 13
Gross written premiums for trade credit insurance in the UK, segmented by domestic and export cover, 2013 and 2015 14
Value of UK exports inside and outside the EU and corresponding percentages of GDP, 2010 to 2014 15
Gross written premiums for export trade credit insurance in the UK, segmented between business and political risk, 2013 and 2015 16
Gross written premiums for trade credit insurance in the UK, segmented between domestic and non-domestic underwriters, 2015 17
Gross written premiums for trade credit insurance in the UK, segmented between business intermediated by brokers and business underwritten directly, 2015 18
Total factoring market value in the UK, 2010 to 2014 19
Percentage of brokers surveyed making regular use of particular trade credit insurance underwriters in the UK, 2015 21
Estimated market shares of gross written premiums of trade credit insurance underwriters in the UK, 2014 22
Estimated market shares of gross written premiums of trade credit insurance underwriters in the UK, 2014 (table) 23
Major banks promoting trade credit insurance in the UK: operating models and partnerships, 2015 25
Major trade associations offering trade credit insurance in the UK: operating models and partnerships, 2015 27
Forecast gross written premiums for trade credit insurance in the UK, 2018 28

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