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The value of certainty

Which value has certainty in regards of the trade credit insurance market?
Schumann Insights, Blog Post
24.05.2022, Mike Holley

Current year's challenges

Insurers trade on the risky business of quantifying uncertainty. However, I struggle to think of a time when the world felt less certain, where risks felt more fluid or where the challenge facing the insurance market was greater. While the peaks of Covid-19 and the return of a war of conquest to Europe stands out, the timeline of the past eighteen months has been full of incidents, from the Ever-Given grounding in the Suez Canal to fraud at Arena TV, to the scandals at Greensill Capital and Rhodium Resources, which have tested underwriters. The London market has once again proven its pivotal role at the centre of specialty insurance.

Why Trade Credit Insurance?

Trade Credit Insurance has, arguably, never been more needed. As businesses around the globe seek to evolve or reinvent supply chains and “just in time” shifts to “just in case”, Trade Credit insurance provides an essential safety net, enabling businesses to change decades’ old practices. That is to say, trade credit insurance has provided many businesses with a valuable lifeline to continue trading, despite unprecedented disruption to global demand and supply.

The necessity of technological innovation

As the needs of the businesses the London Market serves evolve, so too must the marketplace itself – and the players within it. The leaders are increasingly devoting more effort to their digital capabilities. Improvements begin at converting paper files to digital stores, which prove much more reliable and closer to hand when analysing the risk exposure of a major shock to trading and automating risk assessments. At the most sophisticated, best practice digital capabilities should extend to implementing response to early warnings of deteriorating creditworthiness, and enabling quick, flexible policy adaptation to keep up with turbulent times and shifting risk appetites.

Leaders are not necessarily always the syndicates with the largest stamp capacity, but those who carefully manage their resources. In fact, it is often the niche, new carriers that come forward with fresh ideas that stand to challenge the status quo and help keep the cornerstone carriers on their toes. But there are not nearly enough of them on the international trade credit scene. At SCHUMANN we are now receiving regular enquiries from prospective new entrants to the credit insurance market. The barrier to entry is not capacity, it is technology. Start-ups in this marketplace need to invest in certainty-enhancing tech to better understand their risk horizon – and, ultimately, succeed in this well-established corner of the Market.

That is why we are launching in London. This is the most exciting hub for insurance and finance. The demand for increased risk transfer to cover the global uncertainty will flow to EC3. Satisfying that demand when the scrutiny could not be more intense on results requires a platform which is tested and run by experts who have made this sector their home for decades.

Certainty is an increasingly rare commodity. SCHUMANN’s role is to help the trade credit insurance market get closer to obtaining it.

Any questions?

If you need more information, please feel free to reach out.

About the Author
Mike Holley

Mike is an innovative, entrepreneurial Chartered Director with a strong track record of creating and growing businesses across Europe, USA and emerging markets.

Mike has 39 years’ experience in trade credit and political risk insurance, as well as in trade finance. He has been at the forefront of innovation in the industry and has been active in the Dutch and German markets as well as the UK and the US. He was a founder and CEO of trade credit insurer Equinox Global Limited.

Mike’s recent activities include being a director at Nexus Trade Credit, a consultant at Charles Taylor Adjusting, a director of a motor insurance MGA; providing advice to the Irish Government on credit insurance, and acting as Deputy Chair of the London Handel Festival (of classical music).

Mike recently became a Chartered Director after studying with the Irish Institute of Directors.

Strategic Advisor, SCHUMANN

Mike Holley