The world’s leading credit insurance companies and surety insurers met in Amsterdam on October 23-24. The meeting was held under the umbrella of the International Credit Insurance & Surety Association (ICISA), and was attended by some 30 companies conducting business in practically every country in the world.
In their review of the year to date, the industry saw a growth in premium income, mostly as a result of premium rate increases. As most markets are experiencing slow or no growth, insured business has hardly grown. A positive sign was that claims figures continued to improve. The trend towards more profitable business results, identified earlier in the year, continues. It confirms the earlier assumption that the sector has left its recent loss making years behind.
Driven by the requirement to allocate adequate capital for underwritten risks, an industry-wide project was undertaken to determine the so-called probable maximum loss (PML). ICISA had been invited to join this initiative of the Pan-American Surety Association (PASA). The aim of this project is to demonstrate objectively what the maximum potential loss is for a particular underwritten risk, and what capital should subsequently be allocated for that risk. The interim results of this study were shared at the meeting. The final results will help to educate rating agencies and others in understanding the risk management capability of the industry. It aims to assist in setting realistic capital allocation requirements. These again play an important role in the rating given to credit insurers, surety companies and their reinsurers.
An area of concern was the fact that legislation in some countries still discriminates against insurance companies. In spite of many improvements towards a level playing field in most markets, it was noted that this is not the case in all countries. Greece was identified as the only EU country that does not allow insurance companies to issue contract bonds. ICISA will enter talks with the Greek authorities on behalf of its members to address the issue.
Members of ICISA agreed that the association will co-operate closely with the International Institute for Practitioners in Credit Insurance and Surety (IPCIS) in organising training seminars for the industry, which will also be aimed at related sectors like the banking and broker communities.
Following the move of the ICISA secretariat to Amsterdam, earlier this year, and in view of the improved manner of communicating with the various contacts in the EU, the decision was made to close the ICISA Brussels office and to merge the EU activities with the other responsibilities of the secretariat in its Amsterdam office.
The industry is set to meet again in June 2004 in San Francisco.
The International Credit Insurance & Surety Association (ICISA) was established in Paris in 1928 as ICIA (International Credit Insurance Association). The name was changed in 2001 to reflect the growing importance of the surety members in the association. The goal of the association is to provide a forum for the exchange of experience and information, to represent the common interests of its members by facilitating action and representing the industry on an international level, including at other multinational organisations, and to study questions relating to credit insurance, surety, and its reinsurance.
Credit insurance covers the manufacturing, trading and service industry against the risk of loss due to non-payment by their customers (for more information visit www.getpaid4trade.com).
A surety bond or guarantee is normally required under the terms of a construction or engineering contract, to secure the obligations of the principal debtor. It provides security against the failure of the principal debtor up to the limit of the bond, for example the failure of a contractor to complete a contract in accordance with its terms (for more information visit www.suretyinformation.com).
ICISA member companies insure risks in practically every country in the world.
Members are: Allianz Corporate Ireland, AXA Assurcredit, CESCE, Chubb, CLAL Credit Insurance, CNA Surety, Crdito y Caucin, the Coface Group, Concordato, Converium, COSEC, Credit Guarantee Insurance Corp. of Africa, Dansk Kaution, De Montfort Insurance, ECICS, The Ethniki, the Euler Hermes Group, Fianzas Atlas, GE Frankona Re, the Gerling NCM Group, The Guarantee Company of North America, Hannover Re, ICIC, Mapfre, Mitsui Sumitomo, Munich Re, Nationale Borg, Partner Re, Prisma Kreditversicherung, QBE Insurance (Australia), Seoul Guarantee, Sompo Japan, St. Paul Surety, Swiss Re, Tokio Marine, Travelers Casualty and Surety, Warta, Winterthur, Zurich GSG and Zurich Versicherung.
The executive of ICISA is formed by a management committee, which is headed by the president, Frank Robertson (vice-president – Chubb Group), and the vice-president, Franois David (chairman and chief executive – Groupe Coface).