The trade credit insurance market has declined at the end of 2023 without foreigners
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At the end of 2023, the trade credit insurance market showed a decline for the first time in many years, both in the volume of premiums collected and in the number of contracts concluded. According to experts, the trend is primarily due to the departure of foreign companies. In 2024, the segment may begin to recover against the background of growing interest in it from Russian players and an increase in tariffs.
At the end of 2023, fees in the trade credit insurance segment decreased significantly, large brokers told Kommersant. According to Andrey Khabarov, CEO of AST Financial Consultants, in 2023, fees for the trade credit insurance market decreased by 10–15%, to 5.7–6.0 billion rubles.
The reduction in premiums is confirmed by the head of the FINPRO department of the insurance broker Nobilis, Petr Kuznetsov. In addition, he estimates that the number of contracts in the segment has decreased by about 10%.
According to brokers, the market is experiencing a decline for the first time in several years. Overall, until 2022, it grew by an average of 10% per year, but in 2022 and 2023 this trend “leveled out somewhat,” says Mr. Kuznetsov. According to market participants, in 2019 the segment grew by 24%, to 4.1 billion rubles, in 2020 – by 14%, to 4.7 billion rubles, in 2021 – by 34%, to 6 .3 billion rub.
The largest participants in the segment are considered to be Credendo – Ingosstrakh (23%), AlfaStrakhovanie Trade Credits and Soglasie (17% each), VSK (15%), and SberStrakhovanie (10%). At the same time, AlfaStrakhovanie Trade Credits (formerly Atradius Rus Credit Insurance) last year announced the transfer of the portfolio to its parent organization AlfaStrakhovanie (see Kommersant on October 10). Leading players did not respond to Kommersant’s inquiries.
Trade credit insurance is a type of insurance that provides protection against the risk of non-payment on commercial receivables. The object of insurance is the property interests of the insured, associated with the possibility of losses as a result of failure to fulfill contractual obligations by the counterparty.
Such insurance primarily protects against non-payment of debt due to the bankruptcy of the buyer or a long delay in payment. The buyer can be either a resident of Russia or a foreign representative. According to experts, the volume of insurance protection in 2023 amounted to 240–300 billion rubles. The basic tariff rate is about 0.5% of the sum insured.
Often, the clients were foreign companies that bought policies from Russian insurers, explains Kommersant’s interlocutor on the market. The market is declining due to changes in supply chains, payment methods, and a decrease in import volumes, according to the All-Russian Union of Insurers (VSU). According to Nikoliers, 31 foreign brands have completely left the Russian market.
The ARIA cites the general problem of the lack of reinsurance capacity for the entire insurance market (today in the country it is provided in fact only by the Russian National Reinsurance Company, controlled by the Central Bank), and “the segment’s exposure to cumulative losses – events that can affect entire industries.”
At the same time, Nikolai Lebedev, director of the trade credit insurance department of the insurance broker Remind, clarifies that by now insurers have “completed the transition to Russian reinsurance capacity, and have mostly resolved localization issues.” The problem of risk accumulation persists and is especially relevant, according to Mr. Lebedev, in pharmaceuticals, electronics, food retail and the DIY segment.
By the end of 2024, experts expect the market to recover. Andrey Khabarov sees the possibility of an increase of 20% compared to last year. Petr Kuznetsov associates the optimism in the forecasts with an increase in interest in this type of insurance among Russian companies, which currently still provide less than half of the client base. Andrey Khabarov adds that an increase in premiums could ensure an increase in insurance rates.
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