Shop Talk: Trade credit insurance is significantly important for exporters and their financiers; some $2.5 trillion USD, or 13% of total world cross-border trade is underpinned by insurance. TFG spoke to Berne Union’s Secretary General Vinco David about the state of credit insurance following 2019’s uncertainty, and what the priorities are for the trade crdit insurance industry in 2020.
In this 2020 interview series, TFG spoke to 20 experts in trade, receivables and supply chain finance.
An Interview with Berne Union
Name: Vinco David
Position: Secretary General
Organization: Berne Union
Interviewed by Nikhil Patel (NP), Analyst, Trade Finance Global
2019 – The Year of Open APIs?
Nikhil: In 200 words, what were the key highlights and opportunities of 2019 from an industry perspective in trade, receivables and supply chain finance?
The levelling off in the global economic cycle in 2019, compounded by trade conflicts, has led to a slow-down in the growth of world trade. The global credit insurance business mirrors these developments and has likewise seen little growth in 2019. Despite this, Berne Union members are on course to cover roughly the same volume of trade as seen in 2018, which at 2.5 trillion USD, or 13% of total world cross-border trade, demonstrates the significant role of credit insurance in the support of exporters and their financiers.
2019 has seen a growth in digital platforms offering credit insurance, both for single transaction and whole-turnover business. Although several of these platforms are maturing, many of them are still in or around the proof-of-concept phase. It is too early to predict yet which of these platforms are going to be successful in the long run.
Regulation is on top of the Berne Union agenda, especially regulation for banks benefitting from credit insurance. A hot topic in 2019 has been the EU regulation on provisioning requirements for non-performing exposure. This can potentially impact on the terms and conditions of long-term insurance policies to banks, and on the attractiveness of this product to banks.
Digital Ecosystem within BCG – Seeing beyond the technology – A Trade Finance Talks TV interview with BCG
NP: What are your top predictions for trade, supply chain and receivables in 2020?
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2020 Predictions in Trade and Supply Chain Finance – A Berne Union Perspective
NP: In 200 words, what are the biggest challenges in trade, receivables and supply chain finance you predict for 2020?
Uncertainly in world trade is nothing new, but the unique aspect of the current situation is the combination of a proliferation of uncertainties which interact with each other: Trade conflicts, military conflicts (e.g. in the Middle East) technological break-throughs, environmental and social concerns, insurance, bank and industry regulation, and an increase in fraud in trade transactions.
Uncertainty is the buzz-word and the credit insurance industry is well placed to take this uncertainty away for exporters and their financiers.
NP: What are the key priorities for Berne Union in 2020?
For the credit insurance industry at large the priorities are:
- Managing payment and political risk related to trade conflicts and other political events such as Brexit
- Further development of trade platforms and other digital solutions
- Especially for public credit insurers (ECAs): servicing SMEs
NP: What’s your top prediction for a technology that you think will truly kick off / have the most success in 2020?
Artificial Intelligence / Distributed Ledger Technology / Internet of Things / Network of Networks / OCR / Natural Language Processing
2020 comes too early for a full success of any of the above. However, I believe platformisation of the offer of credit insurance will show its first real successes. Why? There are already several initiatives which are operational and growing.
Podcast: Vinco David, Moving forward with Credit Insurance: Mitigating Risk in Trade Finance
Read our trade finance 2020 predictions here
