Ian Watts, Marsh Trade Credit Practice - Credit Insurance

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Ian Watts, Marsh Trade Credit Practice - Credit Insurance

  1. 1. Credit insurance A guide for your supply chain Ian Watts Date
  2. 2. Supply chain <ul><li>Is it a series of linked interdependent organisations or independent profit centres? </li></ul><ul><li>Is the experience predatory or partnership? </li></ul><ul><li>How far back do you need to go to define your supply chain? </li></ul>The critical components for BCC members comprise raw materials, utilities and logistics
  3. 3. Issues related to credit in the supply chain <ul><li>Supplier credit </li></ul><ul><li>Be transparent – why and how </li></ul><ul><li>Cash flow prioritise suppliers </li></ul><ul><li>Understand which suppliers credit insure and rules attached to the policy </li></ul><ul><li>Negotiate on payment terms </li></ul><ul><li>Be wary of small print in contract related to payment terms </li></ul><ul><li>Make friends with the credit insurers </li></ul><ul><li>Assess the strength of your receivables </li></ul><ul><li>Supplier credit worthiness </li></ul><ul><li>Who are your suppliers’ suppliers </li></ul><ul><li>What is their financial performance like - sustainability </li></ul><ul><li>Do they have sufficient credit lines </li></ul><ul><li>Have you got contingencies in place </li></ul><ul><li>Where payments are in advance who controls the cash </li></ul>
  4. 4. Atradius / Coface / Euler Hermes Net Loss Ratio Evolution Source – Moody’s
  5. 5. Average market price (1997 – 2009) Expressed as a percentage of turnover Average premium rates fell by 32.3% between 1997 and 2009 but increased by 16.8% between 2008 and 2009 Source – Association of British Insurers
  6. 6. Outlook <ul><li>Competition for business is increasing </li></ul><ul><li>Rates are under pressure </li></ul><ul><li>Cover and capacity is increasing </li></ul><ul><li>New entrants into the credit insurance market </li></ul><ul><li>Improved risk management around credit </li></ul><ul><li>Clients more willing to share financial data </li></ul><ul><li>Levels of sector based underwriting constraints are reducing. </li></ul>
  7. 7. Leadership, Knowledge, Solutions…Worldwide. This PowerPoint™ presentation is based on sources we believe reliable and should be understood to be general risk management and insurance information only. Registered in England Number: 1507274, Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU In the United Kingdom, Marsh Ltd is authorised and regulated by the Financial Services Authority for insurance mediation activities only. © Copyright 2010 Marsh Ltd. All rights reserved

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