Industry needs to produce more innovative products to address buyers’ needs - International Trade Survey 2014
The number of companies buying trade credit insurance is in decline, despite 69% of UK businesses expecting to depend more on exports over the next five years.
The International Trade Survey 2014, released today, found that many businesses were “ill-prepared” to protect themselves against the risks they will encounter.
Risks related to non-payment of goods and services were UK exporters’ biggest concern, cited by 42% of respondents.
However, only 37% of companies purchase trade credit insurance, down from 40% in 2013 and 53% in 2012.
AIG head of trade credit Will Clark said the industry needs to respond by developing more innovative products to address buyers’ needs and concerns.
“Significant progress has already been made, for example in introducing policies with non-cancellable limits which provide greater certainty to buyers,” he added.
“However, more needs to be done, both in terms of product development and in making buyers aware of the benefits of trade credit insurance, not only to protect them against insolvency but to help secure financing that allows them to invest and deliver future growth.”
Clark said that raising awareness of multinational programmes will also help to support export growth.
The research showed that overall just 12% of UK exporters currently use a multinational insurance programme, while 70% of respondents were unaware of the concept, which provides cover for a company’s operations across multiple locations.
Businesses with turnover of up to £1m were the least aware, while over 50% of companies in the £100m-plus bracket did not know anything about multinational insurance.
Clark said: “If the UK government is to achieve its stated target of raising exports to £1 trillion by 2020, all stakeholders in the insurance industry have a role to play in working together to close these knowledge gaps.”
The survey of over 2,800 companies was produced by AIG (UK), in partnership with Trade and Export Finance and The Institute of Export.