CM November 2019 atradius





Has the credit insurance industry

recovered from a poor showing following

the economic collapse a decade ago?

SEAN Feast FCICM puts the

questions to Stuart Ramsden,

Head of Commercial for UK and

Ireland at Atradius.

SF: What is the biggest

challenge facing the credit insurance sector


SR: Although Trade Credit Insurance has

been supporting trade in the UK for a century

(ECGD began in the UK in 1919) one of

the key challenges for the industry is still

the lack of awareness and the level of understanding

about the full range of benefits

available from the products and services provided.

While industry statistics report nearly

13,000 policies are in force with Association

of British Insurers (ABI) members in the UK,

covering £340 billion of trade, there are also

a significant number of businesses trading

entirely without protection.

When you look at other insurance sectors,

legalities aside, there are few individuals who

would dismiss the need for insurance for a

home, a holiday or a car; the risk exposure

is simply too great. However, too many

businesses do not look at their bottom line

in the same way and are leaving themselves

exposed to the risk of non-payment by

minimising the value of trade credit


With uncertainty dominating the economy

and insolvency rates rising, credit insurance

in today’s climate should be an essential for

any business. Within the industry, we are

confident in our proposition and the part

we play in facilitating trade and we must

collectively do more to raise awareness of

credit insurance, its benefits and the part it

plays in supporting business growth.

SF: Is the market growing and if so in

what areas?

SR: With a rocky insolvency climate and

predictions of increasing business failure

rates, demand for trade credit insurance is

rising. While there is always more we can

do to raise awareness, the developments in

digital access and tailored products designed

for specific segments and business areas

are changing the way businesses think

about credit insurance. Often seen in the

past as ‘too complicated’ or ‘too expensive’

for smaller businesses, credit insurance is

now accessible to every segment and that is

enabling growth.

We have seen an increase in claims across

the industry, which reflects the current

business environment. The ABI reports the

number of insurance claims made in the

first quarter of this year reached a 10-year

high with 5,114 new claims to the tune of

£48 million. In these circumstances, we

do anticipate a rise in new enquiries as

businesses take a more cautious approach

to risk and avoid becoming a casualty of the

next insolvency.

SF: How important are SMEs?

SR: By the end of 2018, there were almost

six million private businesses in the UK; this

is over 60 percent higher than for the same

period in 2000. SMEs account for over 40

percent of all UK businesses at this time. So,

if SMEs exert this amount of influence and

impact on trade, then of course they are also

exposed to varying business risks, including

the risk of non-payment. This is why we

firmly believe that trade credit insurance is

an essential tool for the SME segment.

SF: What are you doing to address their

specific needs?

SR: We have developed Modula Freedom,

a product specifically designed to meet the

needs of SMEs. SMEs often just want to get on

and run their businesses and have ‘access to

finance’ when they need it rather than spend

ages going through prolonged applications

and administration. Consequently, for a

company with a turnover of say £3 million,

the process of applying for a typical whole

turnover policy, with all the necessary

declarations and vetting procedures, is timeconsuming

for them and their broker. The

process for Modula Freedom is very simple

and consists of one application form. There

is also a simple purchase process that quickly

provides the customer with access to our

online portal 24/7. Modula Freedom’s specific

Raising awareness about the

importance of good credit

management practice and

the benefits of trade credit

insurance is something that is

always on the agenda.

The Recognised Standard / / November 2019 / PAGE 16

The Recognised Standard / / November 2019 / PAGE 17



features include first orders cover giving

customers more flexibility and opportunities

to grow their sales with the protection of

Atradius. Customers can also choose the level

of maximum liability required from several


SF: What other new products/

innovations have you recently


SR: The industry is constantly evolving

and as the way trade transactions

take place changes, so we too, continue

to adapt to a more digital world.

Atradius Atrium is our digital platform that

enables our customers (and brokers) to communicate

with us on every aspect of their

policy through one single login – and as you

would expect it is available not just ‘on the

go’ but 24/7. But as important as it is to have

a digital capability there is still a real value in

human interaction and we take pride in not

just our customer service proposition, but the

strong relationships that we build with customers,

brokers and industry in general. For

example, our Risk Underwriting approach revolves

around knowing the market and trade

sector and our Underwriters work closely with

businesses to ensure that the business information

that decisions are based on is current,

and relevant at all times.

SF: Have the lessons of the past been


SR: The severity and ferocity of the financial

crisis of 2008/9 and the sheer number of

firms falling victim to insolvency during that

period make it stand out as an extreme event

in history – there were lessons to be learned

for everyone. The world has changed in the 10

years since the crash and more sophisticated

financial management strategies alongside

fiscal regulation now create a very different


The approach to buyer risk underwriting

has also seen changes. Accurate and up-todate

information is critical as the crisis proved

it was no longer enough to rely on annual

reports or aged accounts. Understanding

the strategic direction of a business as well

as analysing their financial strength is

critical. Our underwriters have built up close

relationships with most key players within the

industry, enabling informed insight into trends

and developments and individual payment

behaviour. We always advise businesses to be

open and transparent with us. We operate an

open-door policy and are proactive in seeking

information to enable us to make informed

credit decisions in support of our customers.

Early warning of a deteriorating risk and

loss mitigation action is essential to protect

against the loss to a customer’s income. It is

important to understand that insurance protects

the majority percentage of monies owed,

but it is industry standard practice for the insured

to carry an uninsured percentage (usually

10 percent) of the debt. One of the reasons

why customers insure in the first place is to

ensure that they trade with businesses that

are strong enough to support credit terms.

If their potential customer is a poor risk,

they want to know that upfront so that they

can make informed decisions. When a risk

deteriorates it is important for all stakeholders

to be aware of what is happening, and

when the risk of non-payment increases significantly

it is appropriate to review the cover

arrangements with our customers – being

alerted to a probable default is a warning that

any supplier would want to receive.

SF: What more could credit insurers

do to educate businesses/credit


SR: Raising awareness about the importance

of good credit management practice and the

benefits of trade credit insurance is something

that is always on the agenda. The ABI has

done a great deal to help create awareness

and has also supported the key providers

in an initiative to work together from a PR


We constantly seek out opportunities to

talk about trade credit insurance and share

our expertise with businesses whether

through publications, events, networking,

speaker opportunities as well as media

segments and of course social channels. In

an uncertain economic environment, there is

a prime opportunity for insurers and brokers

to work collaboratively to demonstrate the

value of trade credit insurance to businesses

both in terms of its ability to protect from

non-payment and through its role as a trade

partner in developing robust trade strategies

to seek out new opportunities and mitigate


Business growth and trade credit insurance

are intrinsically interlinked and, as the

insurer, we need to be involved well ahead

of a contract or new trade relationship being

agreed. It is also important to remember that

education is not one-way. As insurers we are

also learning all the time – listening is key!

We have strong relationships with all of our

stakeholders, which helps us to stay ahead of

the curve in an ever-changing marketplace.

The Recognised Standard / / November 2019 / PAGE 18

The Recognised Standard / / November 2019 / PAGE 19

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