Credit insurance and COVID-19: what after 30th June 2021?

Since the outbreak of COVID-19, credit insurers have repeatedly expressed their fear of a wave of bankruptcies. But until today, the number of failures, both in Belgium and abroad, remains at a normal level. In 2020, the number of bankruptcies in Belgium even decreased by 30% thanks to all kinds of fiscal support measures and, of course, the moratorium on bankruptcies. A system of state guarantees has also been set up for credit insurers, which runs until 30 June 2021.

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State guarantee will not be extended

But what happens after June 30th? There is no denying that the extensive support measures have created an artificial situation that will sooner or later be corrected. It was expected that the state guarantee for credit insurers would not be extended again and this has now been confirmed. After all, this guarantee proved to be of little interest to them. Credit insurers had to surrender a considerable part of their premiums, while they had little or no need for the reinsurance offered by the Belgian state.

Risk appetite

Will the risk appetite of insurers - and consequently the level of credit limits - decrease now? It is difficult to predict because, first of all, we do not have a clear view on the proportion of credit limits that were maintained under the state guarantee.  Some insurers have processed this data more transparently than others, but the proportion is said to be limited in any case.

Moreover, most companies communicate quite openly about their 2020 financials, which allows credit insurers to better assess their risk and adjust the credit limits to the correct level. However, if the number of bankruptcies should increase significantly, this could influence the acceptance policy of your insurer.

Credit insurance during and after COVID-19

Know that we are ready to analyse and optimise your credit insurance in any case. ADD negotiates with various insurers to find solutions for insufficient limit acceptance, from single-buyer formulas to top-up cover in various forms (for a single debtor, a selection of debtors or your entire portfolio), as well as excess-of-loss cover.

Ask for our risk tool

Do you not yet have credit insurance, but would still like to know the risk profile of your customer portfolio? Feel free to contact us and ask for our credit risk tool that maps everything out for you.