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Trade Credit Insurance in Australia

  • March 2014
  • -
  • Finaccord
  • -
  • 27 pages

Trade Credit Insurance in Australia is a report about the market for trade credit cover in Australia. In addition to documenting the development of the market value from 2009 to 2013, the report also divides it for the most recent year between four key segments: between small companies with an annual turnover of less than USD 5 million and larger companies with a turnover above this threshold; between single-risk and annual policies; between export and domestic trade credit insurance; and between protection acquired for political risks and cover bought for business risks.

These unique market splits are based in part on a survey of leading brokers of trade credit insurance in Australia. This same survey also identifies the underwriters of this type of cover used by brokers on a regular basis, gives an input into Finaccord's estimates for the market shares of underwriters of trade credit insurance in Australia, provides a basis for commentary surrounding distribution channels used for this type of policy, and informs Finaccord's forecasts for the market value through to 2017.

Key features of this report include:

- quantification of the market size for trade credit insurance in Australia: how much is the market worth, how has it developed since 2009 and how does it break down into key segments?

- presentation of the actual or estimated market shares of underwriters of trade credit insurance in 2013 based on both the broker survey and other available data sources, plus identification of leading brokers of this type of cover;

- audit of the frequency of usage of underwriters by major brokers of trade credit insurance in Australia: to what extent are competitors effectively challenging the main incumbent underwriters?

- availability of an accompanying PartnerBASE™ dataset that logs partnerships for trade credit insurance identified by Finaccord across a combined total of over 40 leading banks and major trade associations;

- forecasts for the market for trade credit insurance in Australia and how it will split between domestic and export trade credit cover: what is this sector likely to look like in 2017?

Table Of Contents

Trade Credit Insurance in Australia
0.0 EXECUTIVE SUMMARY 1
1.0 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 USD 2 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
PartnerBASE 6
Finaccord 7
2.0 MARKET ANALYSIS 8
Introduction 8
Market size, growth and segmentation 9
The Australian trade credit insurance market has lacked momentum in recent years 9
The number of insolvencies hit an all-time high in the 2011-12 fiscal year 9
Over 50% of business-to-business transactions in Australia are made with deferred payment terms 9
A few brokers concentrate on selling trade credit insurance to smaller companies 11
Most brokers surveyed sell single-risk policies although this remains a small part of the total market 12
More than a quarter of the total market is due to export trade credit insurance 13
EFIC is not active in short-term trade credit insurance 13
In recent years, exports have accounted consistently for just over 20% of Australian GDP 14
Political risk policies can sometimes be acquired on a stand-alone basis 15
Factoring as a complementary / substitute product 16
Australia plays host to a relatively well-developed market for factoring 16
Underwriter market shares 17
QBE is comfortably the market leader by value of business underwritten… 17
…although competition comes from both three international specialists... 17
…and foreign insurers underwriting trade credit risks offshore 17
As many as 16 underwriters of trade credit insurance attract some degree of broker utilisation 19
Distribution channels 20
NCI has established a dominant position in the distribution of trade credit insurance in Australia... 20
... although several other brokers maintain sizeable teams in this field 20
The Export Council of Australia maintains relationships with several underwriters of trade credit insurance . 20
Future outlook 21
The Australian market is expected to return to gentle growth up to 2017 21
3.0 APPENDIX 23
Brokers participating in the survey 23


List of Graphics / Tables


0.0 EXECUTIVE SUMMARY 1
Key market data for trade credit insurance in Australia 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS 8
Gross written premiums for trade credit insurance in Australia, 2009 to 2013 10
Premium income paid by small companies with an annual turnover of less than USD 5 million as a
proportion of the total market for trade credit insurance in Australia, 2013 11
Premium income paid for single-risk policies as a proportion of the total market for trade credit insurance
in Australia, 2013 12
Premium income paid for export trade credit insurance as a proportion of the total market for trade credit
insurance in Australia, 2013 13
Values of exports and imports and split of GDP by sector in Australia, 2009 to 2013 14
Premium income paid for political risk cover as a proportion of the total market for export trade credit
insurance in Australia, 2013 15
Total factoring market value in Australia, 2008 to 2012 16
Estimated market shares of gross written premiums of trade credit insurance underwriters in Australia,
2013 18
Frequency of usage of specific trade credit insurance underwriters by brokers in Australia, 2014 19
Forecast gross written premiums for trade credit insurance in Australia and the proportion due to export
trade credit insurance, 2017 21
Forecast segmentation of gross written premiums in Australia between domestic and export trade credit
insurance, 2017 (table) 22
3.0 APPENDIX 23

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