Trade Credit Insurance Market Outlook – 2027
The global trade credit insurance market size was valued at $9.39 billion in 2019, and is projected to reach $18.14 billion by 2027, growing at a CAGR of 8.6% from 2020 to 2027. Trade credit insurance is a type of insurance designed to protect businesses from political & commercial risks that may influence the finances of the business. It is a type of property & casualty insurance, generally offered by private insurance companies and governmental export credit agencies to business entities or individuals. Moreover, trade credit insurance is largely used to protect accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy.
Rise in focus toward protecting & mitigating risk from non-payment across many types of good & services and expansion of trade in different regions demanding credit insurance are becoming major growth factors for the market. In addition, benefits offered, such as sales support & account receivable support provided by credit insurance, is becoming another major factor propelling the trade credit insurance market growth.
However, lack of awareness of credit insurance across the globe and varied & conflicting trade regulations across different jurisdictions are some of the factors that limit the market growth. Furthermore, developing economies offer significant opportunities for credit insurance solution providers to expand & develop their offerings, especially among emerging economies such as Australia, China, India, Singapore, and South Korea. In addition, surge in small & medium-sized enterprises expanding their businesses is expected to provide lucrative opportunities to the trade credit insurance market share in the coming years.
The large enterprises segment dominated the trade credit insurance market in 2019, and is projected to maintain its dominance during the forecast period. This is attributed to the fact that enterprises under this category are involved in bulk trading & huge amount of data. Therefore, to protect finances & overcome political & commercial risks, this segment emphasizes on the importance of trade credit insurance solutions & services in the market.
The report focuses on growth prospects, restraints, and trends of the trade credit insurance market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the trade credit insurance market.
Products segment will dominate the market throughout the forecast period
The trade credit insurance market is segmented on the basis of component, enterprise size, application, coverage, industry vertical, and region. Based on component, the market is bifurcated into products and services. On the basis of enterprise size, it is segmented into large enterprises, medium enterprises, and small enterprises. By application, it is categorized into domestic and international.
By Enterprise Size
Small enterprises segment will grow at a highest CAGR of 12.5% during 2020 - 2027
By coverage, the market is bifurcated whole turnover coverage and single buyer coverage. Based on industry vertical, it is segmented into food & beverages, IT & telecom, metals & mining, healthcare, energy & utilities, automotive, and others. Region-wise, the trade credit insurance market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific region would exhibit the highest CAGR of 10.7% during 2020 - 2027
The report analyses the profiles of key players operating in the trade credit insurance market such as American International Group Inc., Aon plc, Atradius N.V., Coface, Credendo, EULER HERMES, Export Development Canada, QBE Insurance (Australia) Ltd., SINOSURE, and Zurich. These key players have adopted various strategies, such as product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations, to increase their market penetration and strengthen their foothold in the industry.
COVID-19 Impact Analysis
The COVID-19 pandemic has a significant impact on the trade credit insurance market, owing to increased uncertainty & protectionism in global trade, which is set to boost the demand for trade credit insurance.
Moreover, to curb the spread of virus, several regions have imposed lockdown, which has financially affected businesses. Therefore, trade credit insurance products are gaining momentum during the pandemic situation. This, in turn, has become one of the major growth factors for the trade credit insurance industry during the global health crisis.
Market Landscape and Trends
The trade credit insurance market has witnessed significant growth and evolving trends in recent years. One of the prominent trend is the increasing demand for trade credit insurance among businesses across various sectors. With the globalization of markets and rise in international trade, companies are recognizing the importance of safeguarding their accounts receivable. Thus, trade credit insurance offers financial security by mitigating the risk of customer insolvency, protracted default, or political events that can impact payment capabilities. Another trend is the expansion of trade credit insurance coverage to emerging markets. As businesses explore new markets and establish trade relationships with companies in developing economies, the need for risk protection becomes even more critical. Therefore, trade credit insurers are extending their services to regions with high growth potential, such as Asia-Pacific, Africa, and Latin America, offering tailored solutions that cater to the unique risks associated with these markets.
In addition, technological advancements shape the trade credit insurance landscape. Insurtech innovations, such as automated underwriting processes, data analytics, and digital platforms, are streamlining operations and enhancing the efficiency of policy issuance and claims management. These advancements enable insurers to provide quicker and more accurate risk assessments, making trade credit insurance more accessible and customizable for businesses of all sizes.
Furthermore, the trade credit insurance market is experiencing notable trends driven by factors such as globalization, emerging markets, technological advancements, and the impact of the COVID-19 pandemic. Hence, as businesses continue to navigate an evolving trade landscape, trade credit insurance is poised to play a crucial role in managing credit risks and ensuring the stability of international trade transactions. Therefore, these are some of the major market trends of the trade credit insurance market.
Government initiatives for the trade credit insurance market vary across different countries, reflecting the diverse approaches taken to support and facilitate international trade. In many nations, governments recognize the crucial role played by trade credit insurance to mitigate risks and boost confidence among businesses engaged in cross-border transactions. As a result, they have implemented various measures to encourage the growth and stability of the trade credit insurance market. These initiatives often include establishing public-private partnerships to provide trade credit insurance coverage, offering financial support or subsidies to reduce premiums, creating dedicated insurance funds to support exporters, and enhancing regulatory frameworks to ensure fair and transparent practices. In addition, governments frequently collaborate with industry associations and insurance providers to develop innovative solutions, such as digital platforms for streamlined underwriting processes and information sharing. Hence, all these government initiatives aim to foster trade, safeguard businesses against payment defaults and insolvencies, and ultimately promote economic growth in both, domestic and international markets.
Top Impacting Factors
Rapid Expansion of the Market in New Regions
With an increased export & import of goods & services worldwide, the expansion of trade in new regions has gained momentum in the market. In addition, due to this increased trade, which includes issuing letters of credit (LCs), receivables & invoice finance, and others, the demand for credit insurance has accelerated and is expected to maintain its dominance during the trade credit insurance forecast period.
Moreover, trade credit is used by manufactures, importers, exporters, buyers, and sellers to ease financing activities during trade. Therefore, surge in requirement of goods & services from one country to another and expansion of trade in different regions have increased, thereby boosting the demand for trade credit insurance in the market.
Varied and Conflicting Trade Regulations Across Different Jurisdictions
Various laws set have different standards & regulation across different jurisdictions with an increased unified approach taken by financial centers toward trade regulation. This becomes a crucial factor for credit insurance companies to elaborate solutions, which brings an inter-regulation conflict and hinders the growth of the credit insurance market.
For instance, in the U.S., Export Credit Insurance (ECI) protects an exporter of products & services against the risk of non-payment by a foreign buyer. Therefore, to meet regulatory norms of respective countries before providing trade credit insurance is a major factor that hampers the trade credit insurance market growth.
Key Benefits For Stakeholders
- The study provides in-depth analysis of the global trade credit insurance market share along with current & future trends to illustrate the imminent investment pockets.
- Information about key drivers, restrains, & opportunities and their impact analysis on the global trade credit insurance market size are provided in the report.
- Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the market.
- An extensive analysis of the key segments of the industry helps to understand the global trade credit insurance market trends.
- The quantitative analysis of the global credit insurance market size from 2020 to 2027 is provided to determine the market potential.
Trade Credit Insurance Market Report Highlights
By Enterprises Size
By Industry Vertical
Key Market Players
QBE INSURANCE (AUSTRALIA) LTD., CREDENDO, COFACE, ATRADIUS N.V., SINOSURE, EULER HERMES, AON PLC, EXPORT DEVELOPMENT CANADA, ZURICH, AMERICAN INTERNATIONAL GROUP, INC.
Regulatory bodies across several countries are promoting global trade and numerous small & medium enterprises, which are expected to increase the demand for trade credit insurance policy to overcome commercial & political risk while trading. As a result, it is becoming a major trend in the market. In addition, the COVID-19 outbreak has a significant impact on the trade credit insurance market, as several businesses aims at investing in protecting finances during this global health crisis while insurance companies are focusing toward expanding their offerings in the market.
However, a considerable number of companies perceive that they have minimum trade credit insurance exposure. This scenario is changing, and 2019 has witnessed an increase in sale of credit insurance, owing to rapid expansion of trading primarily among manufacturing sectors globally, which has led to increased adoption of trade credit insurance for the finances involved in the business.
The trade credit insurance market is fragmented with the presence of regional vendors such as American International Group, Inc., Atradius N.V., and Coface. Europe dominated the trade credit insurance market, in terms of revenue in 2019. However, Asia-Pacific is expected to experience significant growth in the future, owing to emerging economies, increase in government support toward trading globally, thereby accelerating the demand for trade credit insurance in the region.
Furthermore, the trade credit insurance market is particularly brisk in countries, such as India, Australia, China, Japan, Indonesia, Korea, Hong Kong, Taiwan, with high GDP growth and rise in per capita income. Some of the key players profiled in the report include Aon plc, Credendo, EULER HERMES, Export Development Canada, QBE Insurance (Australia) Ltd., SINOSURE, and Zurich. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.