Report – which industries have grow to be tougher to insure after COVID-19?


EIOPA said future pandemics and lockdowns are “new potential sources of correlated defaults across all industries,” which has created a seismic shift in the way commercial credit insurers measure risk. You “may therefore see a much higher credit risk in these industries than previously modeled,” the report says. “This could lead to a permanently lower coverage in these sectors.”

Governments around the world enacted trade credit insurance backstops during the pandemic to discourage insurers from pulling insurance coverage from corporations in the midst of the crisis, the Financial Times noted. When the economic outlook clouded over, the European trade credit insurers reduced their total exposure by around a tenth in the past year, said EIOPA.

Insurers paid out EUR 3.8 billion (about $ 4.5 billion) worldwide on trade credit policies last year – up 12% from 2019, the Financial Times reported. According to the International Credit Insurance and Surety Association, that number would have been much higher without government support measures that kept companies in business during the pandemic.

Next read: Credit insurance freeze blocks supply chains

But with the UK’s trade credit reinsurance program expired last month, retailers and other groups fear insurers will withdraw their coverage. Tim Smith, Marsh Global Head of Commercial Credit Insurance, told the Financial Times that while most of their retail customers have been able to renew their insurance coverage, insurers are “scrutinizing” corporate finances before deciding how much coverage to expand .

Smith said e-commerce companies “receive positive reviews, but other industries are ringing the warning bells for insurers.

“Insurers have real concerns in the hospitality industry and it is unlikely [they] will offer great lines of cover until this sector is revitalized, ”he said.