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Trade Credit Insurance in the USA

  • March 2014
  • -
  • Finaccord
  • -
  • 29 pages

Trade Credit Insurance in the USA is a report about the market for trade credit cover in the US. 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 the US. 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 the US, 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 the US: 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 the US: 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 the US 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 the USA
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 6
Finaccord 7
2.0 MARKET ANALYSIS 8
Introduction 8
Market size, growth and segmentation 9
The US trade credit insurance market has experienced a period of consistent growth… 9
…boosted by an increase in trade transactions made on an open-account basis 9
For several brokers, small companies constitute the most important part of their client base... 11
... and for several, single-risk policies are comparatively important within their trade credit insurance portfolio 12
Close to a half of the total market is due to export trade credit insurance... 13
... with a significant proportion of this due to Ex-Im Bank... 13
… although the US is not an especially export-oriented economy 14
Virtually all brokers offering export trade credit insurance also intermediate cover for political risks 15
Factoring as a complementary / substitute product 16
The US factoring market fell back substantially between 2011 and 2012 16
Accounts receivable put options constitute another possible substitute product... 16
... especially for larger corporations 16
Underwriter market shares 17
Euler Hermes is comfortably the market leader by value of business underwritten 17
The top six underwriters are likely to account for over 90% of the total market 17
Zurich occupies a strong position in the single-risk segment 17
Five underwriters of trade credit insurance are used by 50% or more of brokers surveyed 19
A significant number of new competitors have entered the market in recent times 19
Distribution channels 21
Brokers are the main distribution channel for trade credit insurance but not the only one 21
Several specialist brokers compete with larger multiline intermediaries 21
Several major banks promote trade credit insurance to their business customers... 21
... but few trade associations have established affinity schemes in this realm 21
Future outlook 23
The total market value will be close to USD 1 billion by 2017 23
3.0 APPENDIX 25
Brokers participating in the survey 25

List of Graphics / Tables


0.0 EXECUTIVE SUMMARY 1
Key market data for trade credit insurance in the US 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS 8
Gross written premiums for trade credit insurance in the US, 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 the US, 2013 11
Premium income paid for single-risk policies as a proportion of the total market for trade credit insurance
in the US, 2013 12
Premium income paid for export trade credit insurance as a proportion of the total market for trade credit
insurance in the US, 2013 13
Values of exports and imports and split of GDP by sector in the US, 2009 to 2013 14
Premium income paid for political risk cover as a proportion of the total market for export trade credit
insurance in the US, 2013 15
Total factoring market value in the US, 2008 to 2012 16
Estimated market shares of gross written premiums of trade credit insurance underwriters in the US, 2013
18
Frequency of usage of specific trade credit insurance underwriters by brokers in the US, 2013 20
Major banks offering trade credit insurance in the US: operating models and partnerships, 2013 22
Forecast gross written premiums for trade credit insurance in the US and the proportion due to export
trade credit insurance, 2017 23
Forecast segmentation of gross written premiums in the US between domestic and export trade credit
insurance, 2017 (table) 24
3.0 APPENDIX 25

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