Reports that trade credit insurers are increasing their claims by up to 30% points to a deteriorating risk environment, according to members of the International Credit Insurance and Surety Association (ICISA).

News of rising claims could spread worries that competition, for what may be a slightly shrinking pool of business, will continue to affect sinking prices.

However, ICISA president Jim Davidson tells GTR that “sensible” competition is good for policyholders. “Insurers are not surprised or worried that current prices have reduced somewhat, as naturally they had increased following the big claim pay-outs in 2008 and 2009.”

The ICISA’s findings, which were announced at its 70th annual meeting in Singapore last week, prompted concern from members about the current lack of bank financing and the ongoing uncertainty in Europe. The continued weakness in the construction sector and a lack of public spending are also areas to watch out for, Davidson says.

The continuing eurozone problems have inevitably affected insurers’ business, and Davidson says that the export sector in particular will be impacted if credit limit reductions are imposed.

“It is the credit insurer’s duty to carry out good quality underwriting consistent with sound credit management principles. While the credit insurance industry acknowledges it could have done some things a bit better in 2008-2009, it also believes stakeholders now better understand why limit reductions are an important part of the whole process when carrying out credit management and the associated insurance risk transfer,” Davidson explains to GTR.

Meanwhile, ICISA research also indicates that trade credit insurers are increasing their premiums by 10%, while exposures have increased by 11%, totalling €180bn. Ongoing demand for cover with premiums has grown by 7%.