The news of Trade wars between US and other countries are looked upon as a great opportunity to insurers. US President has set off fears of a global trade war with tariffs on metals and an array of imports from China and other countries. Insurers are sensing an opportunity in demand of credit insurance products to tide over possible adverse market conditions.
Trade credit insurance protects companies from the risk that buyers will be unable to pay. If governments implement more tariffs, it could increase the cost of production and ultimately put stress on retailers and distributors to either raise prices on consumers or shrink profits. If the stress is enough to put the buyer out of business, the supplier would activate its trade credit insurance to get reimbursed for defaulted payments.
Trade credit insurance has been relatively slow to catch on in the US. The global market is about $7 billion of premiums, mostly in Europe, according to the International Credit Insurance and Surety Association. Of that, $1 billion is attributed to companies in the US.
