STUART ASHWORTH: So hello and welcome to the Marketplace Insight podcast series. 2025 has certainly started with a bang. We've got armed conflicts continue to grip in Europe and the Middle East. We've seen stock market volatility driven by the imposition of tariffs and counter-tariffs, demonstrations in the streets, economic strain, and the rise of insolvencies, and we're still only three months into the year.
So in a world of increasing volatility, trade credit insurance enables our clients to operate with confidence. But what is trade credit? Who is it for? Who sells it and how does it work? I'm Stuart Ashworth and I'm the head of broking and market engagement for the financial solutions division here at Willis.
And to explore trade credit insurance to try to demystify the product, I'm being joined by Remco Beuvens, Willis's head of trade credit for Europe and GB. Remco, welcome. Thank you for joining me. Remco, you joined us two years ago after a stellar 15-year career ending up as Aon's chief development officer for credit solutions. So when we put this together, we thought you'd be the perfect person to demystify this product for us. But let's start at the beginning, shall we? Now, for the benefit of the audience, how should we define trade credit insurance?
REMCO BEUVENS: Thank you, Stuart, for this amazing introduction. Trade credit insurance is linked to non-payment of buyers, of companies, in general. There's a lot of invoices sent by our clients domestically as well as internationally, and our clients need to secure the payment of those receivables. Trade credit insurance steps in. Our markets step in to secure those payments.
STUART ASHWORTH: I'm going to pick up on something you said. You said, "Our markets step in" There are obviously barriers to entry. You need analytical capabilities. So who are the markets? Who are the main players? And then maybe once you've said that maybe who are the main markets who this is going to appeal to.
REMCO BEUVENS: That's a really interesting one. We actually are a few niche markets. That's three global players that do trade credit insurance on a global scale. Those are Atradius, a single-liner, based in Amsterdam headquarters in Madrid. We have Allianz multiliner. We all know them. Allianz Trade, I must say, and we have Coface.
Those have set up underwriting teams around the globe assessing the risk, the credit risk of individual companies. They make up for around 70% of our global markets. That 30% is split by so-called specialty trade credit insurers. They do not have that operational team being able to assess buyers, but what they do have is the ability to commercially underwrite our clients based on their own internal credit procedures. AIG, Markel, QBI Zurich are players that you can think of that also provide trade credit insurance.
STUART ASHWORTH: So the fact that this is a growing market with new players coming in implies it's a profitable line of business, but it is a discretionary purchase, which means clients don't have to buy this. So there has to be a motivation for them coming in and thinking about how they're going to buy it, what they're going to spend their dollars on. So how does trade credit insurance kind of allow a client to grow, allow them to trade freely?
REMCO BEUVENS: Yeah, the reason why companies buy trade credit can be different. You mentioned growth. That's one of the key decision criteria for a client to buy trade credit. Obviously, it is balance sheet protection because you transfer the risk of non-payment of balance.
Secondly, our clients buy trade credit insurance to be able to assess the risk of new clients in new territories. And that allows them to profitably grow their business. Next step, trade credit insurance, if you look at our financial solutions bank client environment, is often used to also finance receivables, and probably, we will discuss it a bit later, that can directly support growth. Liquidity these days is key.
STUART ASHWORTH: So let's pick up on that point you've mentioned about bank financing. I think, as you say, liquidity is key. It's the lifeblood of organizations. So how can a trade credit insurance policy attract finance? Is it an enabler of capital? How does it fit together? And what should clients think about when they're talking to their banking partners?
REMCO BEUVENS: Trade credit is insuring the risk on open account. So often, what we see is payment terms between businesses of 30, 60, or 90 days. And actually, you grant credit to your buyer. Banks but also factor companies step in. And with credit insurance, they are able to buy discount those receivables, which gives our client direct cash at day one, the day they sell. And that's something we as Willis are very good at because of those banking relationships, and we have a great team that support our clients, analyzing the portfolio, using the data and then come up with the best possible provider of financing.
STUART ASHWORTH: So let's pick up on that. On that attracting trade finance piece. It's a dynamic market. There are different market segments. So how does the financing world differ from maybe the ground-up whole turnover type of insurance product?
REMCO BEUVENS: Well, I would say the financing world itself is not that different. Financing world of factoring and bank, they discount portfolios of receivables. But what we see is a shift in accepting also other insurers, as I mentioned before, like the excess of loss insurers with higher deductibles where also finances are willing to finance receivables linked to those specific policies.
And what we do well as Willis and where we support our clients is maximize the cover on individual buyers. What we see there is a lot of capacity out there, a lot of reinsurance capacity, but the capacity on single names you can imagine, like big consumer electronic houses, we can structure policies with additional capacity, the so-called top-up policies, allowing our clients also to finance the full receivable or the full exposure they have on certain clients.
STUART ASHWORTH: Now, that's interesting. I mean, so-- the I mean, the markets obviously, as I mentioned, it's dynamic. It's an ever-evolving marketplace with new entrants coming in. But what's happening in the market. I mean, there are-- we have-- as we said, at the top of the podcast, we've got a rise of insolvencies. Are these manifesting in claims to the market? Is that dampening down enthusiasm for new markets coming in? So what's happening in the general credit market at the moment?
REMCO BEUVENS: Well, actually, you started off telling an increase of claims that already started last year, but they were mostly smaller ones, a smaller late payment notifications. The last couple of months, we have seen some bigger buyer groups also going bankrupt insolvent.
On the other hand, we also see new markets come in because capacity and also the profitability of trade credit insurance is still quite high, and the ability to assess and also be able combined with the client to step out exposure makes it still interesting for markets to step in there. But it is likely with this geopolitical unrest that something might happen. And we see some big, big companies that have difficulties in refinancing. So those are the teams that we speak about with our clients. Yes.
STUART ASHWORTH: So that's what's keeping the insurers awake at night?
REMCO BEUVENS: Totally, yeah.
STUART ASHWORTH: OK. There's also been an increase from what we've seen of MGAs, and that's been impacting us across the whole suite of insurance products that we sell as a company. I guess, credit insurance is no different. So the MGAs who are they? What market segment are they pitching for? Are they going in at the bottom layer? Is there an excess of loss concept, and where are they really trying to play?
REMCO BEUVENS: The majority of the MGAs-- and there are not that many in a trade credit-- started by adding new capacity on top of, I would say, the established three credit insurers. That has developed a bit, and I think a few now, and I know a few now, also offer traditional trade credit, insurance, whole turnover, but they cannot underwrite like massive amount of companies. So it is a selective amount of clients that could benefit from MGAs, but the majority still it is mainly linked to adding additional capacity on existing credit insurers.
STUART ASHWORTH: So it's sort of augmenting and supporting the existing incumbent three big credit insurers and supporting where they may run out of limits or capabilities.
REMCO BEUVENS: Yeah, yeah. Yeah, absolutely.
STUART ASHWORTH: So Remco, that's been a really valuable insight into the world of trade credit insurance. And I know you're busy. You're running around. You've got phone calls with clients. You're trying to close some deals. But before we let you get back to your day job, I was going to ask you for some final comments.
So venture capitalists often talk about AI products and services as being either vitamins or painkillers. So the nice-to-haves are the vitamins, and they can be put off until a later date. The need to have right now, so the painkillers are things that people can't live without at the moment. And it feels to me like trade credit is in that latter bucket. It's things that people need. So what message can we put back to our clients?
REMCO BEUVENS: Please reach out to your local or regional trade credit specialist. We have over 150 with a lot of experience that can support our clients together with our colleagues in exactly what we just said. Bankruptcies will rise. Clients are in need of cash and as well as we need to be close by, I think we differ from our competition by really looking at the whole supply chain, creating lean solutions for our clients, and we are really excited to speak about it. So thanks, Stuart.
STUART ASHWORTH: You're very welcome. So I guess my conclusion economies are volatile. Clients need capital. They need solutions, and we have a market who are open for business and happy to engage. So as you say, reach out to the financial solutions colleagues within Willis. So that just leaves me to thank remco for his time and contribution on this episode of the Marketplace Insights podcast, and we look forward to welcoming the audience back in the next one. Thank you.
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