A preliminary report on the business activity of Berne Union Members in the first half of 2020 indicates that the expected spike in claims due to the COVID- 19 pandemic has not yet been realised.
In contrast, export credit claims paid in 2020 H1 were 16% lower overall than for the first half of 2019. This can be partially attributed to a decline in new commitments during the same time, largely attributed to a general decline in exports, with a 23% drop in new medium and long-term (MLT) commitments reported and a 4% drop in aggregate credit limits issued under short term (ST) export credit insurance policies.
In MLT business, both public and private insurers’ new commitments declined, while for short term, private insurers’ commitments fell by 8%, whereas those of public insurers rose by the same percentage. Private insurers’ ST claims / commitments ratio came down marginally, while this increased for public insurers, as well as for both providers, in their MLT business.
Berne Union President Beatriz Reguero comments of the claims data that “The fact that we have not yet seen a significant increase in claims payments is in large part due to protection afforded by various forms of fiscal support from governments as well as by the quick reaction of lenders and insurers in restructuring deals when necessary. The consensus amongst the industry is that we can expect to see a more obvious change in claims trends towards the end of the year.”
Secretary-General, Vinco David adds that “The industry will certainly see an increase in claims related to the pandemic, but where exactly these materialise will depend upon both the underlying business and the management of current structural support. The transition away from state support, both for exporters and the private market, requires very careful management and creative and flexible approaches from all players to avoid disruption. This is something we will be looking at through the remainder of this year as many of the support schemes approach their provisional end dates.”
The Berne Union has recently published it’s 2019 Industry Report, providing a benchmark on the state of export credit insurance immediately prior to the current crisis. We continue to publish research on the industry response to COVID-19, with an update due in the coming months.