As trade credit insurance celebrates its centenary this year, Tom Danson, regional manager of Atradius, says this business tool remains just as important as ever in these uncertain times
This year marks an important milestone for trade credit insurance in the UK as it is 100 years since this vital business tool was first developed for UK traders.
Trade credit insurance was introduced in 1919 with the primary purpose of supporting businesses to export and resume trade relations in the aftermath of World War I.
Today, trade credit insurance continues to protect businesses and facilitates millions of pounds of trade every day. While the fundamental essence of trade credit insurance remains intact, there is also a lot that has changed.
The needs of businesses have, understandably, moved on as new opportunities arise, alongside the ever-changing risks inherent with international trade.
Even looking back over the past three years, the economic and trading landscape is barely recognisable, with Brexit-fuelled uncertainty clouding the horizon.
However, trade credit insurance continues to be a relevant and essential tool for businesses in navigating the path ahead.
Brexit, a risk to be managed
Throughout the years, we’ve protected businesses from every risk imaginable – whether political, economic or unique to a single customer.
At its core, insurers manage risk and essentially Brexit is exactly that; a risk to be managed. Therefore, despite the prevailing uncertainty, today’s climate is in many ways, business as usual. Of course that’s not to say that trade credit insurance – and Atradius as an insurer – hasn’t evolved.
Flexibility and adaptability are key and we’ve made it our business to ensure our products, advice and service are constantly enhanced so that they are always the best they can be. But we’ve also seen an evolution on a much wider scale.
Progressive and proactive
Traditionally, credit insurance was perhaps seen as something that only came into play should things go awry.
However, at Atradius we are proud to have developed a much more progressive and proactive approach.
Our expert insights and leading analysis allows us to support businesses to identify and seize new opportunities in the first place as well as mitigating risks, while continuing to provide a cushion of protection should the unexpected occur.
We now get involved with businesses at the very outset of a trade journey and, for the smartest, even earlier, becoming a trade partner to business.
To stay ahead of the game, businesses need a strong support network that is able to provide the right tools and information to them ahead of time, and this is where the quality of the broker-insurer relationship comes into the fore.
Whereas once a linear relationship may have existed between the customer, broker and insurer, this has transformed into a true collaboration. Knowledge is pivotal for businesses to mitigate risk both in new and existing trade relationships and real time insights and expert analysis are essential to successfully and safely navigate the path of global trade.
Working together, brokers and insurers can provide their clients with everything they need to build a comprehensive trade strategy, to manage risk and achieve growth.
Thousands of UK firms already recognise the value of trade credit insurance and are benefiting from the protection from bad debt that it delivers.
The ABI reports that in 2018 trade credit insurers paid claims in excess of £250m to support British firms facing unpaid invoices. However, while protecting against non-payment is essential, the ability to trade with confidence is just as important and where the expertise of specialist brokers and trade credit insurers really makes a difference, especially when choosing a new market or developing a new customer relationship.
While trade credit insurance marks its centenary in the UK, we embark on a new era as trading relationships evolve in the wake of Brexit.
Brokers and insurers continue to work together and unite to deliver a dependable and sought-after service for their customers in a post-Brexit economy, forming a solid foundation for trade that is designed to weather the challenging climate.