UK trade credit insurance market stable amid economic uncertainty – Marsh

The UK trade credit insurance market has stabilised after insurers avoided knee-jerk reactions to economic changes to instead take more bespoke, individual rating action on a firm-by-firm basis.

This is according to a new report from broker Marsh, entitled The Balancing Act: How UK Businesses Are Fuelling Growth and Navigating Risk in Uncertain Times. Published in May 2025, the broker surveyed 100 UK businesses to uncover the biggest barriers to their growth.

Trade credit insurance aims to protect businesses from the financial risk of non-payment by customers. Marsh’s report commented that this line of business had been operating in a highly volatile economic landscape of late, with a myriad of macroeconomic challenges impacting firms’ solvency.

This includes, for example, US president Donald Trump’s tariff hikes following his re-election in November 2024, higher than usual UK inflation at 3.5% for the 12 months to April 2025 and proposed regulatory changes from the FCA and Prudential Regulation Authority (PRA) from November 2024 around Incremental Risk Charge (IRC) calculations.

The regulators wish to amend IRC rules to better capture risks in trading books, particularly around low probability events that take place over longer time frames.

Addressing delegates attending a breakfast event unveiling the report findings on 28 May 2025, Ian Leslie – Marsh Specialty managing director and UK head of trade credit – said: ”We haven’t seen any action taken in terms of decisions [based on] the tariffs [or] IRC changes, which is a factor for businesses. It’s very much a wait and see policy.

“That, for me, is really important because the financial and insurance markets – in terms of capital – are the grease and cogs that make trade work. If they start retracting back, that can [create] a self-fulfilling prophecy as to what happens.”

Leslie explained that the report findings showed “more individual action” was being taken by insurers on a specific customer-by-customer basis, rather than sweeping, sector-wide rate changes.

Collaboration

Marsh’s report found that the UK trade credit market remains highly competitive, with 16 insurers offering this type of insurance. This has led to premium reductions for many clients, the report noted.

Leslie said that even in a ”highly competitive market”, insurers providing this line of business are seeking to be more collaborative.

He continued: “Born out of [the Covid-19 pandemic] is a collaboration now between the market that happens across all carriers. There isn’t an insurer out there that I know now that won’t syndicate with another insurer. Even in a highly competitive market, they will look to do it if it’s the best way of getting the client what they want.

“Collaboration with other insurers is key because that allows you to provide your client with what you want without having to take more exposure on.”

Close eye on capacity

Leslie explained that capacity in the trade credit market will be closely scrutinised this year because “as credit limits increase, the cost of goods increase and that can create capacity issues”.

Sectors where trade credit insurance is not used as heavily have greater capacity available.

He said: “Syndication is a great way of getting around [capacity challenges].

“It tends to be the larger insurers that have the capacity issues, but insurers like Cartan Trade – [which] are relatively new to the UK market – [or] AIG, these guys have got the ability and the suite to provide all the same stuff as the top three in our market, but they just don’t have the same capacity constraints.

“Where we’re seeing clients not getting the answer they want, [this] is predominantly down to risk, not capacity.”