Credit insurance is rapidly growing. Effective collaboration between banks, insurers, and reinsurers is channelling capital to developing-market projects.

Credit insurance, which protects financial institutions, or sellers of goods and services, against bad debt and is therefore used as an important risk management tool, is in an exciting growth phase. As a result of innovation and effective collaboration between banks, insurers, and reinsurers, much latent capital has been unlocked, allowing a range of developing-market projects to take off which might have otherwise been deemed as ‘too risky’. So why is this tool not being used more broadly to channel funds to where they are most needed? The challenge lies in the market not being as well understood as it could be. The non-payment insurance market for single risks is worth an estimated €2.2bn pa in premiums and growing, and is used to facilitate an estimated €600bn of lending to the real economy, according to ITFA1. The World Trade Organization reports2 that 80% to 90% of world trade is in some way reliant on trade finance and that the private credit insurance market plays a significant role in this. “The market has really grown and become innovative over the past five years,” says Gary Lowe, Managing Director and Head, Global Credit Insurance Group at Standard Chartered. “There’s a real synergy between banks, clients, brokers, the insurers and reinsurers – it’s a fantastic piece of the credit market that could translate to channelling more capital to areas and projects that will benefit the most.”