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Trade Credit Insurance in China

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

Trade Credit Insurance in China is a report about the market for trade credit cover in China. 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 China. 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 China, 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 China: 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 China: 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 70 leading banks and major trade associations;

- forecasts for the market for trade credit insurance in China 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 China
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 5
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 7
Finaccord 7
2.0 CHINA 8
Introduction 8
Market size, growth and segmentation 9
The Chinese market for trade credit insurance has experienced extraordinary growth since 2009 9
Over 40% of business-to-business transactions in China are made with deferred payment terms 9
The bulk of the trade credit insurance market is attributable to premiums paid by larger companies 10
The proportion of single-risk policies within the market total is relatively high in China 11
Export trade credit insurance accounts for more than half of the total market… 12
... and Sinosure lost its monopoly position in this sector in January 2013 12
The Chinese economy is becoming progressively less dependent on exports 13
Cover for political risks makes up a significant proportion of the total market value 14
Factoring as a complementary / substitute product 15
In recent years, China's factoring market has registered a six-fold increase in value 15
Underwriter market shares 16
Sinosure remains the overall market leader by a very considerable margin... 16
…while a number of providers compete in domestic trade credit insurance... 16
… including third-ranked Yingda Taihe which sells all of its business on a direct basis 16
Distribution channels 19
Direct sales by insurers and their agents constitute the major distribution channel in China... 19
... albeit plenty of brokers are active in the market for trade credit insurance 19
... including Willis and Zhejiang Guomao, both of which have established substantial specialist teams 19
A primary motivation for buyers of trade credit insurance is to obtain bank finance 19
Several important trade associations in China offer this type of insurance to their members 19
Future outlook 21
The value of the Chinese trade credit insurance market is likely to double by 2017 21
3.0 APPENDIX 23


List of Graphics / Tables


0.0 EXECUTIVE SUMMARY 1
Key market data for trade credit insurance in China 2
1.0 INTRODUCTION 3
2.0 CHINA 8
Gross written premiums for trade credit insurance in China, 2009 to 2013 9
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 China, 2013 10
Premium income paid for single-risk policies as a proportion of the total market for trade credit insurance
in China, 2013 11
Premium income paid for export trade credit insurance as a proportion of the total market for trade credit
insurance in China, 2013 12
Values of exports and imports and split of GDP by sector in China, 2009 to 2013 13
Premium income paid for political risk cover as a proportion of the total market for export trade credit
insurance in China, 2013 14
Total factoring market value in China, 2008 to 2012 15
Estimated market shares of gross written premiums of trade credit insurance underwriters in China, 2013
17
Frequency of usage of specific trade credit insurance underwriters by brokers in China, 2013 18
Major trade associations offering trade credit insurance in China: operating models and partnerships,
2013 20
Forecast gross written premiums for trade credit insurance in China and the proportion due to export trade
credit insurance, 2016 21
Forecast segmentation of gross written premiums in China between domestic and export trade credit
insurance, 2017 (table) 22
3.0 APPENDIX 23

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