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Introducing Trade Credit Insurance
By Lucy Stagg, senior manager of trade credit insurer Atradius
When I tell people I work in trade credit insurance, it’s fair to say most aren’t entirely sure what it involves. And, while I thought I understood the industry before I joined the Financial Services Graduate Programme, looking back I realise I never fully appreciated its role.
From the first day of my placement at Atradius in Cardiff Bay back in 2015, the facts blew me away. Trade credit insurance has a long history, having first been introduced in the aftermath of World War I to support exports and stimulate the economy. More than a century on, its function in facilitating trade and protecting businesses has never been stronger.
In essence, trade credit insurance protects a business if its customer is unable to pay its bills. The risk of non-payment could arise from any number of issues from insolvency, cashflow constraints, bankruptcy, default or political risk. Should a credit insurance policy not be in place, the impact of non-payment on a business can be severe; putting a squeeze on cashflow and even potentially pulling the business into financial difficulty of its own. By being able to make a claim on a trade credit insurance policy, the business is buffered from the blow.
While paying claims remains at the core of the industry, over the course of 100 years, credit insurance has evolved to be so much more. With real-time intelligence and on-the-ground support around the world, Atradius provides customers with unrivalled insights and advice to manage risk and even help identify new trade opportunities. By working closely with customers, Atradius acts as a partner to businesses to develop robust trade strategies right from the beginning of a trade journey.
In today’s environment, business support is more important than ever. The coronavirus pandemic has rocked economies across the globe and the future outlook is nothing but uncertain. The insights, advice and support of Atradius to businesses during this time – together with protection against non-payment remains vital. During a time of such turbulence, the role of the industry has been recognised by governments around the world. Here in the UK, the Government introduced a temporary treasury-backed reinsurance scheme to provide targeted support to trade. Through this, trade flows that would have been uninsurable due to the impact of Covid-19 are supported, with the scheme enabling insurers to take on more challenging risk than they might otherwise have been able to carry, so helping the UK’s economic recovery. Atradius, alongside other insurers and the ABI, worked closely with UK Government to develop this scheme and we welcome its extension through to June 2021.
After spending five years with Atradius and now fully integrated into the company as a senior manager, I can testify to the critical role credit insurance has to play in facilitating trade and supporting businesses. Behind the scenes, credit insurance is quietly but constantly and reliably at work. I’m proud to work in an industry which provides such a fundamental and valuable role in supporting businesses, day in, day out.
Atradius is a global provider of credit insurance, bond and surety, collections and information services, with a strategic presence in over 50 countries. The products offered by Atradius protect companies around the world against the default risks associated with selling goods and services on credit. Atradius is a member of Grupo Catalana Occidente (GCO.MC), one of the largest insurers in Spain and one of the largest credit insurers in the world. You can find more information online athttps://atradius.co.uk