Is Trade Credit Insurance protection a friend or foe?
That’s the question that the Chartered Institute of Credit Management East of England Branch asked themselves when Andy Moylan FCICM, the Chief Executive Officer of EFCIS gave our virtual, sizeable audience an insightful and informative overview of Trade Credit Insurance and its evolution over the years caused by dramatic recent changes and challenges.
Andy outlined the economic position and the sectors most likely to be worst hit. He described the different types of insurance policies – cancellable, non-cancellable & hybrid, and the high market share of the four leading companies, supplemented by another ten underwriters.
What you should be doing.
Andy’s best advice to clients is to demand more than ever from their specialist trade credit insurance brokers, such as revised terms, pre-vetting of credit limits, and investing in new technology. The process was increasingly dependent on new technology, including AI, to make more informed decisions.
What to expect.
Just because you had been trading with a company for years and they had always paid on time, was no longer a valid approach for a business to take. We should expect increased company insolvencies and significantly more payment delays and payment plans.
Contrary to common belief, cover was available for large companies, SMEs and high risk businesses, and around 96% of claims were paid. He stressed that now was a good time to take a fresh look at insurance as we move from the non normal trading conditions created by the pandemic, the zombie economy, considerable additional business government support, reduced sales, and the focus on survival. Used properly, insurance could unlock available working capital to support increased sales growth.
Looking to the future, Andy expected even more cover, mapping the premium to risk, and exciting developments such as new scorecards, top up cover and two to three year deals.