Insurance Premiums for the credit business skyrocket

post-author - Fri 01 Jul 2022 - insurance , commercial credit , credit management , flowchart , surety

In 2021, according to Ania (Associazione Nazionale fra le Imprese Assicuratrici), insurance premiums recorded in the credit sector increased by 14.5 percent (to 644 million) compared to 2020.

 

The insurance industry managed to make up what it had lost due to the pandemic during 2020. 

 

Based on information provided by insurance companies in advance (and therefore still provisional) , ANIA collected info about gross insurance premiums  in 2021 for the Italian direct portfolio of non-life and life business.

 

 

 

The data refer to companies:

 

- Headquartered in Italy;

 

- With registered offices in European and non-European countries with representation established in Italy;

 

- Operating under the freedom to provide services (LPS) regime but belonging to the IVASS Group Register.

 

 

 

With reference to domestic insurance companies and representations for Italy of non-European companies in 2021, total inflows exceeded 140 billion with an increase, in homogeneous terms, of 3.8 percent compared to 2020.

 

 

 

88.2% is concentrated in hedges of risks related to so-called "trade receivables within"

 

For this category, hedges of 535.9 million were accounted for, an increase of 14.7 percent compared to what was recorded in 2020 (when they amounted to 467.1 million). Taking into account that in 2021 the balance of portfolio movements in previous years was positive by 11.4 million (and thus increased the premium level), the actual increase in premiums written was 11.8 percent.

 

There is one line of business that saw double-digit growth in premium income: Credit and Surety, with +11.5 percent.

 

Premiums collected for "other guarantees" (export trade receivables, installment sales, mortgage and subsidized loans backed by collateral, receivables from leasing contracts, etc.) totaled 53.5 million in 2021 (it was 46.1 in 2020), up 16.1%.

 

These signals confirm to businesses how vital credit management and the protection of present and future cash flow are for a continuation of business.

 

War, geopolitical complexities, and inflation are all factors that are fueling rising risk premiums in equity and credit markets globally. This is what Goldman Sachs analysts observe.

 

The phenomenon is less pronounced for U.S. equities, which we see as favored over European equities at this time. Weighing on the latter, according to the investment bank's expert, is geographical proximity to the conflict in Ukraine and greater energy dependence on Moscow.