This time last year, the trade credit and political risk insurance community was preparing for increases in Covid-related claims. The anticipated winding down of government-led assistance schemes was expected to place a strain on businesses that had been reliant on that support, leading to financial pressure and even company collapse.

Instead, what happened was quite the opposite: global insolvencies declined by 14% in 2020 and are expected to decrease by 1% in 2021, according to Atradius’ October insolvency forecast.

However, those initial fears have not yet been allayed. The trade credit insurer argues that insolvency rates have been kept “artificially low” as a result of the extension of fiscal measures in many countries – including in support of small businesses – as well as, in some cases, amendments to insolvency law.

It’s a point that is taken up several times throughout this publication, including in one of the roundtable discussions, where a participant notes: “If you look back to the financial crisis of 2007, it took the central banks a very long time to react. Arguably, this time, they’ve overshot it.” The conversation continues: “Particularly in the SME space, a number of companies that should have fallen over have been artificially propped up. I think we’ll see the results of that peak mid-next year.”

Trade credit insurers agree: Euler Hermes predicts a 15% rise in global corporate insolvencies in 2022 while Atradius forecasts the jump to be as high as 33%.

As outlined in the roundtable discussion, the insurance market is already seeing an increase in claims and is expecting elevated activity in the coming months.

Elsewhere in this annual publication, we pick up on other major market trends.

We assess the path to net zero underwriting for private and public insurers, examine sectors navigating rapidly changing policies and rising geopolitical tensions, and evaluate the digitalisation efforts to streamline workflows for brokers, underwriters and insureds. We also investigate disgraced supply chain finance firm Greensill’s extensive use of risk mitigants, including trade credit insurance and export credit agency guarantees, which played a significant role in both the company’s rapid growth and its sudden collapse.