2025 was not the loss year we had envisaged. Coming into 2025 we had anticipated the usual volume of credit and political risk (CPRI) claims activity driven by the ongoing sovereign loss payouts from Africa, and an uptick in trade credit insurance (TCI) claims given the expected rise in insolvencies. Instead, we saw a marked uptick in new CPRI claims activity with total claims reaching the highest level in five years, landing at a total of $85.4 million.[1]
On average, over the last five years, 53% of CPRI claims collected were from new loss notifications. This year that figure rose sharply to over 80%.
The sanctions environment has continued to complicate the claims landscape, particularly on claims that have a Russian touchpoint following the Unicredit AG v Celestial Aviation Services judgment by the Court of Appeal in 2024 – a judgment that is now subject to review by the Supreme Court.
Insurers have been placing increasing reliance on outside counsel and King’s Counsel advice in order to determine how best to approach claims with a Russian touchpoint, and the complexity of the landscape has meant differing outcomes for clients. In our experience, no claims have been disputed and monies do continue to flow. That said, insurers often need to seek licences from bodies like the Office of Foreign Assets Control in the U.S. or the Export Control Joint Unit in the U.K., which has potential ramifications for the claim timetable. Whilst a challenge for the affected clients, the impact is fortunately limited as many insurers reduced their Russian exposures following the Crimea invasion of 2014.
Heavy industry has seen the most loss activity this year, with most CPRI claims coming from Europe and Asia. Interestingly, TCI claims have followed a different pattern to CPRI claims. Reported industry loss ratios remain benign in spite of the anticipated rise in insolvencies. Regionally, Africa & Middle East continue to yield higher claim frequencies, especially in commodity-dependent and emerging construction markets. More broadly, troubled sectors include agriculture, energy, mining, and infrastructure, where insolvency trends are pronounced.
The insurance outlook remains challenged with geopolitical issues remaining at the forefront. Claims are expected to rise over the next 12–24 months due to tightening credit conditions. TCI pricing is expected to remain steady, but prices are softening in the CPRI space according to our data. Underwriting discipline is going to be key for insurance markets, so we are expecting increased diligence requirements for new transactions, though the increase in market capacity remains a positive for clients.
For more information please contact our Credit Risk Solutions team.
