Marsh broker predicts increase for insurers.
Trade credit insurers are likely to increase their capacity despite difficult economic conditions, according to a top broker.
Tim Smith, head of trade credit insurance at Marsh, said he expected insurers to be more selective in their risk but also to increase their capacity.
Typically, suppliers wait 90 days before being paid for goods received, but more and more are taking credit insurance against their customers becoming insolvent in the interim .
Smith said insurers – such as Euler Hermes, Atradius and Coface – were facing tougher times on loss ratios. Ratios have risen to 60% from 40%-50% – and are set to go up again.
But the insurers would be able to increase their capacity as demand was high, he added.
“I think that overall capacity will increase, but not by multiples,” Smith said.
A spokesman for Atradius said its book of business remained firm and it was not withdrawing cover on whole market sectors.