The Berne Union hosted its 2017 Annual General Meeting (AGM) in Belgrade in October, gathering 260 participants representing 70 of the 82 Berne Union member organisations, inclucing external guests. The Meeting was hosted by Serbian Export Credit Agency (ECA), AOFI.
Members reported strong growth in new business across all committees, and although claims remain high, and the global risk environment challenging, most are optimistic about the coming months and into 2018.
Short Term Trade Credit Insurance (ST)
Members of the ST Committee have collectively issued credit limits of USD 1,188 billion at the mid-point of the year. This is 18% higher than the situation at year end 2016, where they stood at USD 1,007 billion. Two thirds (67%) of members surveyed expect further increases in business volumes over the coming 12 months, and the majority of the remainder (27%) anticipate a stable continuation of the current state.
Growth is expected across developed markets generally, especially North America and the European Union, where economies are benefitting from improving fundamentals, relaxed lending conditions and increasing domestic demand. Any changes to interest rates are likely to have a significant impact on this situation.
There is some caution with respect to the impact of fluctuating oil prices – with the potential to adversely affect both oil exporters or net importers, depending on the direction of travel.
For those countries reliant upon commodities exports more generally, there are also concerns, especially in Sub-Saharan Africa, where levels of national indebtedness are also high.
Members are keeping an eye on the banking sector in Asia, while in OECD countries traditional retail brings greater concern, due to competition coming from online sales. Notwithstanding the challenges highlighted, 94% of ST members express optimism overall with respect to prospects for global economic growth in 2018.
Business Focus and Challenges
In most areas, members of the Berne Union report competitive pressures presenting a challenge for their business. In short term business, 26% cited the soft market as a concern, while 30% focused on digitisation of processes and 19% on better provision for SMEs.
INV members cite concern about soft market pricing as well, but also see a challenge in distribution. In some areas a lack of demand, which may be overcome by improvements in marketing awareness of products to potential clients.
According to Secretary General, Vinco David, “The market for commercial credit insurance has seen a number of new well-capitalised entrants offering credit insurance at competitive rates. Due to the current low interest rates, capital markets parties are seeking higher returns and credit insurance may offer this. However, when interest rates begin to rise, this situation will reverse. As supply and demand establish a new balance, we would expect to
see higher premium rates as a consequence”.
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