Time to listen to the end users

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01 October 2005

As international trade deals and risks grow bigger, bank demand for credit insurance products is also rising sharply. What do banks expect from insurers and brokers, and how do they view market developments? Michael Rowe investigates.

Read more: ECA finance trade trade finance export

Commercial and political risk insurance for trade finance deals has changed considerably over recent years. Trends such as privatization, drying up of government guarantees, shrinking bank margins on lending and high levels of liquidity in many emerging markets are requiring both public and private sector insurers to become more flexible, to lower premiums and to develop their capacity to provide cover.

By the same token, banks keen to capture trade finance business have had to adapt to a world in which government-backed importers have progressively disappeared from the stage and corporate risk has largely replaced the sovereign variety. At the same time the value of the deals to be financed has shot upwards and lenders are routinely keeping far more of this risk in their own portfolios than they did five or ten years ago. As a consequence banking demand for risk mitigation products in this sector has developed dramatically,...

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