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Unpredictability is a defining characteristic of today’s trade finance scape. In this regard, the need for insurance cannot be understated.

Speaking to Trade Finance Global’s Deepesh Patel at ITFA’s 50th annual conference in Cyprus, Carol Searle, General Counsel and Group Board Director at Texel Group, unpacked some developments here.

Searle shared three main reasons why banks use credit insurance for trade finance.

Firstly, in case of buyer default or non-payment. “If a borrower doesn’t repay what it owes, the bank has a recourse to be paid by the insurance protection,” she explained. 

“Secondly,” Searle continued, “is the question of increasing the borrowing that they can give to a customer by increasing the limits that they can use by using insurance to cover that.” 

And finally, “the cherry on top”: regulatory capital relief insurance. Obtaining this adds another layer of economic efficiency in utilising the product.

To find out more, watch the full interview.