The credit insurance industry is made up of major multinational insurers, giant corporates and an estimated US$14bn in trade credit premiums for the current year. But it also comprises many long-serving professionals, who have not only witnessed the industry’s evolution but have also played a role in shaping the credit insurance landscape we see today. GTR interviewed three senior figures representing different facets of the credit insurance market – an insurer, a broker and a financial institution – to learn about their career journeys, the transformation within the sector over time, and what the future looks like.


Charles Berry

Founding director, BPL Global

GTR: How did you first start out in the credit insurance sector?

Berry: On graduating in 1974, I joined a small subsidiary of Hogg Robinson that was pioneering the Lloyd’s political risk insurance market for foreign direct investments. Fortunately, we sat alongside a fellow subsidiary, the Credit Insurance Association, then arguably the world’s leading credit insurance broker. My political risk colleagues and I took their excellent internal training programme. We then used that knowledge to help develop political risk cover in Lloyd’s for capital goods exporters and contractors operating in the Middle East and elsewhere. This evolved into the contract frustration insurance market when it was officially recognised as a class of business by Lloyd’s in 1982.


GTR: What are some of the key differences between the market then and now?

Berry: There has been a huge change in the market. In the early years of my career, export credit insurance, both short term (ST) and medium and long term (MLT), was exclusively in the hands of government export credit agencies (ECAs). Domestic trade credit insurance in each major country was usually written by one of the specialist insurers, like Trade Indemnity in the UK. Meanwhile, Lloyd’s had a total ban on all forms of ‘financial guarantee’ business, including credit insurance, dating back to a scandal in the 1920s. This tied in with the view of the wider general insurance market that all forms of financial risk business were toxic. Trade credit insurance – defined by the muddled idea that it was only credit insurance if the underlying insured debt was a trade debt – was possibly acceptable, but still best left to specialist monoline insurers.

Today, of course, the conventional ST trade credit insurance market has been privatised and internationalised, with many general insurers also writing the class alongside the dominant monoline insurers. And while the ECAs remain important, are major players in the MLT market and still participate in some ST business, they have been joined by 60 or more private sector insurers operating in the specialist credit and political risk insurance (CPRI) market and covering much the same sort of risks as the ECAs, and insuring both trade contracts and trade and non-trade related loans.


GTR: What would you say is the biggest achievement in your career?

Berry: It’s fair to say that BPL, which I founded with Anthony Palmer and Robbie Lyle in 1983, was influential in persuading Lloyd’s to open up the market to private sector credit insurance. We placed the original Lloyd’s trade credit insurance market facility, led by Hiscox, in the mid-90s. Up to that point, Lloyd’s underwriters were only permitted to write non-payment insurance on government buyers. It was an important market development.

But I would also take some credit for BPL always having a very clear and simple view of our market, based on the laws of agency. This view begins by appreciating that we CPRI market professionals are not the important people in the market: the important people are the clients and the capital providers. The market professionals are merely the agents of one or the other: underwriters acting for the capital providers and brokers acting for the clients. It is a view which we believe is shared in the CPRI market generally. It has served the market well: we cannot take our clients for granted, as insurance is not the only credit risk mitigant available to them; and we cannot take the capital providers for granted, as they have other, more traditional classes competing for their insurance market capital. In this area of large and complex risks, both clients and capital providers need to be looked after loyally by their respective agents.


GTR: Is there a person or company you’ve dealt with in your career that you have a great deal of respect for, or that you think had a significant impact on the sector?

Berry: Forgive me for selecting people not normally associated with the CPRI market: Sir David Rowland, former chairman of Lloyd’s, Robert Hiscox, and the others who solved the Lloyd’s crisis of the late 1980s and early 1990s. The crisis was in part caused by a failure of many market practitioners of earlier eras to apply the principles of the law of agency in the manner discussed above. Regardless of its causes, the crisis represented an existential threat to Lloyd’s, the London insurance market, and the nascent CPRI market. It is thanks to the people, led by Sir David, who solved the crisis that we have today a thriving Lloyd’s and the buoyant CPRI market that we are familiar with. As a result, London retained its position as the dominant centre for specialty global insurance businesses like BPL. Those with a keen interest in the CPRI market will be pleased to note, however, that Sir David started his career as a credit insurance broker at Stewart Wrightson; and Robert Hiscox’s Syndicate 33 was the bedrock of the CPRI market in the early 1990s.


GTR: How do you think the future of the credit insurance market is looking?

Berry: In the long term, potentially very good. In time, credit insurance could become a significant class of business. Today, in global insurance terms, the CPRI market is still a small, niche class, dependent on an important but narrow client base. There are many banks and financial institutions that remain unfamiliarwith the capabilities of credit insurance. We are also engaged in the process of winning the trust and understanding of regulators. But while this will take time, I believe that credit insurance has the potential to become the dominant instrument of lender-arranged credit risk mitigation, both for banks and other financial institutions.


Benoît des Cressonnières

Global head of reinsurance, Allianz Trade

President, International Credit Insurance & Surety Association (ICISA)

GTR: How did you first start out working in credit insurance?

des Cressonnières: I was working in private equity in Belgium, which was not as interesting as it would have been in a major financial centre. A headhunter approached me and talked to me about a possible career in insurance. Initially, I said ‘no, that’s not for me’, but eventually he started to convince me to at least have a look at it. Then I moved into the trade credit insurance industry, which I found fascinating. I was CFO for Allianz Trade in Belgium but in 2000 moved to Paris to become responsible for reinsurance and investor relations, because at the time the company was still listed.


GTR: What are some of the key differences in the industry from when you joined in 1997 compared to now?

des Cressonnières: There are a lot of differences because, in 1997, the market was much more fragmented than today. It was only the start of the integration of the major insurers. Before, you basically had one or two trade credit insurance companies per country mainly covering domestic business. Since then, there has been enormous integration in the industry, with Allianz Trade, Coface and Atradius buying insurance companies in other countries. By 2002, the market was almost already fully integrated; there has not been another major acquisition in the market since then. Those three companies are still the biggest players, in addition to Sinosure in China.


GTR: What about the demographic of people who work in the industry? How has that changed?

des Cressonnières: In some ways, the profile of people who work in the industry is pretty similar, but the development of new technologies has caused many processes and roles to change. For example, 20 to 25 years ago, financial analysts would physically visit companies to discuss their business development and strategy and use those visits to assess and grade risks. Obviously, today, the data is readily available for everyone on the web and several other data sources. Accordingly, managing data efficiently is key today, especially considering the huge amount and variety of data available on themarket. We need to use new technologies, such as artificial intelligence, to keep our expertise and develop the value proposition we bring to our customers. So, in addition to the traditional underwriters, we also have a lot of data scientists alongside IT specialists.


GTR: Has the product itself changed?

des Cressonnières: It has become truly international and global. The product we sell in France is the same in Germany, the US or Asia Pacific. Another key change is that a policyholder not only pays us to indemnify them when they have a claim, but they pay us to avoid the claim in the first place. That’s very different compared to other insurance industries. Because we’re insuring trade receivables and we are covering their working capital, it’s tremendously important for a company to be paid.

In industries where the margins are thin, if even one trade receivable is not paid at the due date, the company will suffer a loss and struggle to recover it over time, putting its business at risk. Even with an insurance policy, we will only indemnify 90% or 95% of a claim, so the profit margin could be wiped out. That’s why we are working and partnering hand-in-hand to have close collaboration, in order to understand the policyholder’s needs and risk. Sometimes, policyholders may share information with us that we were not aware of before. This information can help us to understand their needs better and provide them with the coverage they require. This is crucial to achieve a common understanding and deliver the best possible service.


GTR: Do you think the product has been slow to gain popularity outside Europe, for example in North America and Asia?

des Cressonnières: It’s funny because trade credit insurance was invented in the US in the late 19th century, but the product never really developed there as it did in Europe. One key reason for that is that payment terms in the US are generally shorter, for example, an average of 30 days compared to 60 to 90 days in Europe, which minimises the duration of the risk. However, I think it is changing a bit.

Moreover, in the US there is a tradition of companies building their own credit analysis teams, but that’s an expensive exercise and we offer broad credit analysis for almost every country for a much lower cost. The product is also evolving, so we offer much more than just indemnification, but also claims collection, risk ratings products, etc. There are still some challenges, such as the concentration of business in large cities like New York, Washington and Los Angeles, and the need for licences to operate in each state. In Asia, it took a long time for the market to develop because China was closed for so long and information was hard to come by, and if you don’t know the risk, you can’t insure it. A fair and sophisticated legal environment is extremely important too.


GTR: What has been the biggest achievement of your career?

des Cressonnières: In the trade credit insurance industry, my biggest achievement is probably what I did in the reinsurance department of Allianz Trade. When I arrived in Paris in 2000, it was chaotic and every group company had access individually to the market, so there was no consistency. The first thing I did to increase the efficiency was concentrate all the reinsurance decisions within one team. Then we set up the group reinsurance company in Switzerland, where the reinsurance technical expertise is extremely well developed. By pooling all the risks within one dedicated reinsurance entity, we had more consistency in our covers and stronger negotiating power to drive fair terms and conditions from the market. It also supported the optimisation of our capital and the development of solid reinsurance structures. This helped the group to develop its business in providing added value to our customers and increased our risk appetite, as we were adequately reinsured by strong and skilled reinsurers.


Silja Calac

Head of private debt mobilisation GTB Europe, Santander

Chair of the insurance committee, International Trade and Forfaiting Association (ITFA)

GTR: How did you first get involved in the credit insurance sector?

Calac: In the early 2000s I was in charge of the trade syndication desk for UniCredit in Singapore, when risk co-operation between banks and insurance companies in the transaction banking space was rather scarce. Swiss Re was one of the rare insurers covering banks for trade business, through a co-operation which had started largely with HypoVereinsbank, which later became UniCredit Munich. Some ex-employees of HypoVereinsbank had moved to Swiss Re and were of the opinion that if they could reinsure insurance companies, why not also reinsure banks in the surety field? While I was at HypoVereinsbank in Singapore, we signed one of the first participation agreements between Swiss Re and HypoVereinsbank, for the financing of aircraft wings.

During the financial crisis, by which time I had returned to Europe, we found it was very difficult to get a credit limit from banks anymore. We typically shared risks for trade instruments, such as letters of credit relating to markets like Bangladesh or Kazakhstan. Overnight, you couldn’t find any bank partners for such business anymore. But the insurers stayed resilient. For the big multiline insurers, their main exposure lies with large earthquakes and thunderstorms, not when there is a credit crisis. So, their support gave banks comfort and helped us convince our management of the benefits of co-operation with insurers. After 2009 I started building up the insurance co-operation for my bank, and so when I started looking for a new challenge, it was a natural step to join Swiss Re.


GTR: How has the industry changed since you first became involved?

Calac: Back then, an earlier iteration of the Basel regulations was in place, so there was no pressure on risk-weighted assets like we have now. If we could not take on a risk, we tried to distribute it to somebody else who could. This didn’t favour co-operation with insurers because an insurer wants to enhance the credit capacity of a bank, but they don’t want to take risks which the bank doesn’t want. This evolved because, with Basel III, risk-weighted assets became the main focus for distribution for banks. Banks still distribute because they have limited capacity and because they want to mitigate risks, but one of the main drivers is risk-weighted asset budgets and one very efficient way of reducing risk-weighted assets is to swap a BB- or BBB- risk of a corporate into the AA or A risk of an insurer.

Another change has been banks’ perception of insurers. Everyone has dental or car insurance, and often the experience is that insurers try to wriggle out and not pay. I think there was a fear that insurers were not reliable partners. This has been shown as untrue because in our market it’s really a partnership.

It’s a small market where reputation is super important and an insurer could never wriggle out of a transaction.

On the contrary, I have experienced that insurers pay claims even though strictly speaking legally, they would not have been obliged to pay them.

The claims statistics which are produced every year by A2Z Risk Services – one of ITFA’s consultant partners – show clearly that over the last few years insurance in our market has had a flawless track record.


GTR: What is the achievement you are most proud of in your career?

Calac: One of them is the establishment of the ITFA insurance committee.

I was already on the ITFA board when I joined Swiss Re and, at the time, we only had one insurance member: Swiss Re. I pointed out that because insurance was becoming such an important tool for banks, we needed to involve insurers. I went to brokers asking them to join, but they all said that it was impossible to have two brokers at the same table. But David Neckar from WTW said, ‘we have to overcome this’. Since then, we have built up ITFA’s insurance committee so much that ITFA has now over 40 members from the insurance space. Only 10 years ago, I was told that it would never fly, but now it’s so successful, and I think that’s great and it fills me with happiness.


GTR: Is there a person or company who, at some point in your career, you’ve learned a lot from or who you think has been instrumental in helping improve or change the industry?

Calac: I had several inspiring bosses – mainly my first boss at Credit Lyonnais, Patrice Tournus, who taught me all about forfaiting and then at UniCredit, Markus Wohlgeschaffen, who believed in me and supported me. The whole team at Swiss Re who were co-operating with banks a long time before it became common, for example, Volker Handrich, Azman Nooriani and Andreas Hillebrand. They had a vision of how banks and insurance companies could co-operate, which I thought was fabulous. I have also learned a lot through ICISA and received much support and ideas. More recently, Jean-Maurice Elkouby from ING and Sébastien Heurteux from BNP Paribas – the three of us have pushed a lot in the ITFA insurance committee.


GTR: How do you think the future of credit risk insurance is looking? What obstacles will it face?

Calac: I think global transaction banking and insurance are now so closely linked that they will continue to grow together. Last year’s survey on the credit risk insurance market for banks, which ITFA carries out on a regular basis together with the International Association of Credit Portfolio Managers, showed that the total of insured exposure amounted to approximately US$136bn, facilitating nearly US$350bn-worth of transactions.

Of course, there will be obstacles such as regulatory hurdles or major claims events, which will temporarily impact the business. But being a strong community with a really good business case, we will overcome such challenges.