| Trend | Range |
|---|---|
 |
-5% to flat |
Key takeaway
Despite challenging macroeconomic conditions, market conditions for new insureds remain favorable.
- On a macroeconomic level, business bankruptcies have continued to climb quarter over quarter since Q2 of 2022.
- This increase has led to a 40% increase in insolvencies for the 12 months ending March 31, 2024.
- Leading insurers have reported double-digit percentage increases in both the number and dollar amounts of claims filed.
- Despite this increase in claim activity, pricing continues to be aggressive for new insureds entering the market.
- Financial institutions are employing trade credit to enhance financing facilities to strengthen competitive opportunities.
- Financial institution-based indications from insurers remain exceptionally competitive with aggressive pricing and risk acceptance.
- Policy innovation and technology offerings in trade credit are broadening, providing greater tools to the credit management and risk teams.
- The economic impact of tariffs will depend on final tariff levels and the US administration’s goals. These goals will become more clear as the first bilateral deals are reached with US trading partners. Our working assumption is that sector tariffs may prove more durable and some “reciprocal” tariffs will be negotiated away in exchange for less retaliation against sector tariffs, agreements to purchase US goods, quotas or quota-like arrangements and possibly geopolitical commitments or commitments to the US dollar.
- Efforts to use tariffs to obtain geopolitical commitments may lead to longer-lasting trade wars with significant economic impacts for both the US and trading partners. Tariffs tend to be inflationary, although some of this impact can be offset by currency movements. Countries imposing sudden and high tariff barriers tend to see lower economic growth, because during a transition period businesses must invest (in moving supply chains, in finding new customers) to obtain the level of output they had before tariffs were imposed. Uncertainty around tariffs may lead to sharply lower investment, impacting the business cycle, particularly in the US and countries that rely on US markets.
- During recent shocks, such as the global financial crisis and pandemic, governments have intervened to limit bankruptcies. High debt levels in some advanced and emerging economies may limit such interventions during tariff shocks.
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