International risk team: Mitigation in Trade Credit Insurance

Published on 07 April 2020

The measures taken by governments around the world to halt the spread of COVID-19 are already having a significant impact on the global economy. The prohibitions on trade, and closures of businesses, unfortunately mean that an increase in defaults and insolvencies is inevitable.

Trade Credit Insurers are accustomed to working with their Insureds to mitigate loss, but the current situation may call for a rethink on some of the approaches commonly used. 

Trade Credit policies require policyholders to exercise due diligence in seeking to minimise loss prior to payment of a claim. Insurers generally expect their Insureds to use the waiting period to make these efforts, with the primary focus being on avoiding the need to claim under the Policy. Although Insurers expect to be kept informed during this period they may steer clear of active involvement until it is clear that a claim will be presented, and/or they have formed a view on coverage. Given the Trade Credit market’s experience in managing exposure, it may be that Insurers now need to have an earlier involvement in loss mitigation than would usually be the case.


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