Supply chain issues, inflationary pressures and geopolitical uncertainty contributed to the market’s challenges in Q2 2022
Market conditions for trade credit coverage became more challenging during Q2 2022 in the UK, said insurance broker Aon.
In its latest Market dynamics outlook report, published today (30 August 2022), the broker said that market conditions for trade credit cover in Q2 had been impacted by ongoing supply chain issues, inflationary pressures and uncertainty related to the geopolitical events in Eastern Europe.
Aon said that while underwriting appetite for trade credit insurance was reduced because of these difficulties, capacity was “generally sufficient to meet most client needs”.
In terms of underwriting, insurers leveraged a more rigid and rigorous approach and focused heavily on policy language, while product innovation became a priority.
Despite reduced capacity and underwriting appetite, Aon predicted that demand for trade credit cover would continue to increase.
Double-digit increases in pricing for trade credit cover became more common – average prices rose by between 11% and 30% across Q2, according to Aon’s report.
The broker predicted that market conditions for the business line would remain challenging.
Trade credit insurance provides cover for businesses if customers who owe money for products or services do not pay their debts or pay them later than the payment terms dictate.
The cover is for products and services that are due within 12 months.
Insurance Times has contacted Aon for further comment.
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