Trade Credit Insurance Market to Grow with a CAGR of 10.23% Globally through 2028
Increasing global trade and the growing awareness of
the benefits of trade credit insurance are factors driving the global trade
credit insurance market in the forecast period 2024-2028.
According to TechSci Research report, “Global Trade
Credit Insurance Market - Industry Size, Share, Trends, Competition
Forecast & Opportunities, 2028”, the Global Trade Credit Insurance
Market stood at USD 10.45 billion in 2022 and is anticipated to grow with a CAGR
of 10.23% in the forecast period, 2024-2028. Global trade credit insurance is a
specialized financial product designed to protect businesses engaged in
international trade. It serves as a safety net against the risks of buyer
non-payment, insolvency, or protracted default. This insurance tool is crucial
for companies seeking to mitigate the uncertainties associated with
cross-border transactions. It allows businesses to confidently extend credit
terms to buyers, expand into new markets, and optimize working capital. Trade
credit insurance providers assess buyer creditworthiness, offering valuable
insights for risk management. In an interconnected global economy, this
insurance is vital, supporting economic growth, stability, and the facilitation
of international trade.
One of the primary functions of global trade credit
insurance is risk mitigation. When companies engage in cross-border trade or
even domestic transactions with buyers on credit terms, they expose themselves
to the risk of non-payment. This risk can arise from various factors, including
the financial instability of the buyer, economic downturns, political
instability, or even unexpected events like natural disasters. Trade credit
insurance steps in to protect businesses from the potential financial losses
resulting from these risks. It ensures that even if a buyer defaults on payment
or goes insolvent, the seller will receive compensation, enabling them to
maintain their financial stability and continue their operations.
Market expansion is another crucial aspect of global
trade credit insurance. Companies often look to expand their market reach
beyond their domestic borders to tap into new customer bases and growth
opportunities. However, entering unfamiliar markets can be daunting due to
uncertainties related to buyer creditworthiness and payment practices. Trade
credit insurance instills confidence in businesses by providing a safety net
against these uncertainties. With the knowledge that they are protected against
non-payment, companies are more inclined to explore new markets and expand
their international footprint, thereby contributing to the growth of global
trade.
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Effective risk assessment is a fundamental component
of trade credit insurance. Insurance providers assess the creditworthiness of
buyers, helping sellers make informed decisions about extending credit terms.
This risk assessment not only aids in determining appropriate credit limits but
also provides valuable insights into the financial health of potential trading
partners. It ensures that businesses enter into credit agreements with a clear
understanding of the risks involved, reducing the likelihood of payment
defaults and disputes.
Access to financing and the optimization of working
capital are critical benefits that global trade credit insurance offers.
Lenders often view insured receivables more favorably, as they represent lower
credit risk. Consequently, businesses with trade credit insurance find it
easier to secure financing on better terms, such as lower interest rates and
improved loan-to-value ratios. This enhanced access to financing is invaluable
for companies looking to invest in growth, expand their operations, or simply manage
their day-to-day cash flow more effectively. Additionally, by minimizing the
risk of unpaid invoices, trade credit insurance allows businesses to optimize
their working capital by reducing the need for large cash reserves to cover
potential bad debts.
The global trade credit insurance market is segmented
into component, coverage, application, enterprise size, industry
vertical, regional distribution, and company.
Based on enterprise size, the market is segmented into
large enterprises, small & medium enterprise.
Small and Medium Enterprises (SMEs) are emerging as
the fastest-growing segment in the global trade credit insurance market. SMEs
often face greater credit risk challenges and financial vulnerabilities
compared to larger corporations. As a result, they are increasingly turning to
trade credit insurance to protect their accounts receivable and ensure cash
flow stability. The accessibility and affordability of tailored credit
insurance solutions for SMEs, combined with the recognition of their value in
risk mitigation, have fueled this rapid growth. As SMEs continue to drive
economic growth and international trade, their increasing adoption of trade
credit insurance is a testament to its importance in supporting their financial
resilience and growth ambitions.
Major companies operating in Global Trade Credit
Insurance Market are:
- American International Group Inc.
- China Export & Credit Insurance
Corporation
- Chubb Limited (ACE Limited)
- QBE Insurance Group Limited
- Nexus Underwriting Management Ltd.
- Euler Hermes (Allianz SE)
- Aon plc
- Zurich Insurance Group Ltd
- Axa S.A.
- Willis Towers Watson Public Limited
Company
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“Global trade credit insurance is a financial tool
vital for international commerce, protecting businesses against the risks of
non-payment or insolvency from buyers. It facilitates market expansion,
enhances access to financing, and supports risk management through credit
assessment. Key trends include digital transformation with data analytics and
blockchain, adaptation to supply chain disruptions post-COVID-19, expanded
coverage for political and sustainability risks, and Europe's dominance in this
market. The growing demand for tailored risk mitigation solutions reflects its
increasing significance in the ever-evolving global economy, making it a
crucial instrument for businesses navigating international trade complexities,”
said Mr. Karan Chechi, Research Director with TechSci Research, a
research-based management consulting firm.
“Trade
Credit Insurance Market – Global Industry Size, Share, Trends, Opportunity, and
Forecast, Segmented By Component (Products, Services), By Coverage (Whole
Turnover Coverage, Single Buyer Coverage), By Application (Domestic,
International), By Enterprise Size (Large Enterprises, Small & Medium
Enterprises), By Industry Vertical (Food & Beverages, IT & Telecom,
Metals & Mining, Healthcare, Energy & Utilities, Automotive, and
Others), By Region, Competition”, has evaluated the future growth
potential of global trade credit insurance market and provides statistics &
information on market size, structure and future market growth. The report
intends to provide cutting-edge market intelligence and help decision makers
take sound investment decisions. Besides, the report also identifies and
analyzes the emerging trends along with essential drivers, challenges, and
opportunities in the global trade credit insurance market.
Contact
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Techsci Research LLC
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