Trade Credit Insurance in a ‘sweet spot’ in Asia

Singapore, 18 August 2008
Marsh, the world’s leading insurance broker and risk advisor, said today that the window for obtaining favourably priced and widely available Trade Credit Insurance is closing quickly in Asia.

“Trade Credit Insurance across Asia is in a much healthier position compared to Europe and the US, with relatively low prices and good availability of cover from local underwriters,” said Richard Green, Head of Marsh’s Trade Credit and Political Risk Practice in Asia.

“However, we see the market tightening with rates increasing and capacity shrinking in the fourth quarter of this year. This means businesses should secure their trade credit cover sooner rather than later.”

Trade Credit Insurance helps companies manage the risk of customers' insolvency or payment default. It enables companies to trade on non-secure payment terms for account receivables, making them a more attractive trading partner for buyers.

From a buyer’s perspective, it is better to transact with a supplier on an open account basis rather than have to provide a letter of credit or bank guarantee. Trade Credit Insurance allows suppliers to offer unsecured payment terms without taking on increased risk.

“At the moment, we are seeing a window of opportunity for clients, especially for Asian businesses dealing within Asia. The intra-Asian trade continues to be more favourable while companies dealing with European or US counterparts will have more trouble securing Trade Credit Insurance,” said Mr Green.

“We have seen an increase in claims costs, which means it’s only a matter of time before the premiums increase to reflect this. Companies should take advantage of the ‘sweet spot’ the market is currently in.”

Counterparty credit worthiness has become a major issue in today’s difficult economic environment. Companies are turning to the insurance markets to manage, mitigate and transfer risk associated with trade credit issues as an alternative to the traditional bank credit guarantee products which are more difficult to obtain today.

Marsh’s Global Trade Credit Practice has been voted #1 for the past three years by Trade Finance Magazine.


Contact
William Sargent
+65 8139 7400
william.sargent@marsh.com

About Marsh
Marsh, the world’s leading insurance broker and risk advisor, has 26,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with more than 55,000 employees and exceeding $11 billion of annual revenues. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting firm; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. MMC’s stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. MMC’s Web Site is www.mmc.com.  Marsh’s Web site is www.marsh.com.