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Trade Credit Insurance in Canada

  • April 2014
  • -
  • Finaccord
  • -
  • 22 pages

Trade Credit Insurance in Canada is a report about the market for trade credit cover in Canada. 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 Canada. 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 Canada, 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 Canada: 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 Canada: 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 Canada 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 Canada
Table of Contents

Executive Summary

Introduction

Market Analysis

List of Graphics / Tables





0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION

What is this report about?

Rationale

Several factors underpin the rationale for the production of this study

There are several distribution channel options in addition to brokers

Globally, trade credit insurers cover over USD 2 trillion of commercial credit exposures

The report provides a standardised analysis of important metrics for trade credit insurance

Methodology

Research program

Market data analysis

Definitions

Trade credit insurance

Single-risk and annual policies

Export and domestic policies

Political and business risks

Premiums

Abbreviations

PartnerBASE

Finaccord



2.0 MARKET ANALYSIS

Introduction

Market size, growth and segmentation

Canada's trade credit insurance market has delivered little growth in recent years...

... in spite of the country's reasonably strong economic performance since 2010

A high proportion of the market is accounted for by small companies with a turnover below USD 5 million

The vast majority of the market is likely to be accounted for by annual policies...

... with export trade credit insurance outweighing domestic trade credit cover by a fairly slim margin

Exports account for about 30% of Canadian GDP, a figure that has changed little since 2010

Cover for political risks plays a minor role in the Canadian market for trade credit insurance

EDC's influence is greater than that of equivalent state-owned enterprises in other countries

Factoring as a complementary / substitute product

Canada's factoring sector has expanded very rapidly from a low base in recent years

Underwriter market shares

The presence of EDC means that the Canadian market for trade credit cover is quite concentrated

Competition comes from familiar international specialists plus several other niche players

Among brokers surveyed, Euler Hermes is the most frequently used provider of trade credit policies...

... with another eight companies enjoying utilisation to one degree or another

Distribution channels

Insurance agents and direct sales provide significant competition to brokers...

...and several banks are also involved in the distribution of trade credit insurance...

... as are a handful of trade associations, most of which have partnered with EDC

Future outlook

The trade credit insurance market is forecast to experience improved growth up to 2017

3.0 APPENDIX

Brokers participating in the survey




LIST OF GRAPHICS / TABLES


0.0 EXECUTIVE SUMMARY

Key market data for trade credit insurance in Canada

1.0 INTRODUCTION

2.0 MARKET ANALYSIS

Gross written premiums for trade credit insurance in Canada, 2009 to 2013

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 Canada, 2014

Premium income paid for single-risk policies as a proportion of the total market for trade credit insurance in Canada, 2014

Premium income paid for export trade credit insurance as a proportion of the total market for trade credit insurance in Canada, 2014

Values of exports and imports and split of GDP by sector in Canada, 2009 to 2013

Premium income paid for political risk cover as a proportion of the total market for export trade credit insurance in Canada, 2014

Total factoring market value in Canada, 2008 to 2012

Estimated market shares of gross written premiums of trade credit insurance underwriters in Canada, 2013

Frequency of usage of specific trade credit insurance underwriters by brokers in Canada, 2014

Major banks offering trade credit insurance in Canada: operating models and partnerships, 2014

Major trade associations offering trade credit insurance in Canada: operating models and partnerships, 2014

Forecast gross written premiums for trade credit insurance in Canada and the proportion due to export trade credit insurance, 2017

Forecast segmentation of gross written premiums in Canada between domestic and export trade credit insurance, 2017 (table)

3.0 APPENDIX

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