The Great Recession and Trade Credit

At Encharter Insurance we offer general Commercial Insurance products, such as Commercial Property, General Liability, Worker’s Compensation and Bonds. In addition to these competitively priced commercial insurance products, Encharter Insurance offers a widely unknown, but equally important product, Accounts Receivable Insurance or sometimes called Trade Credit Insurance.

Most economists say that this Great Recession started in 2007 and is the worst recession since World War II. There are a few theories as to what will happen next.

- Full Recovery of the world economy
- Uneven Recovery, where developed economies will be flat and emerging economies will see a strong recovery.
- Double dip recession, when the current stimulus programs expires the absence of this type of backing without something to fill this void, world economic growth will go back to negative.

The current data available about the deterioration of corporate profits is staggering. After years of an aggressive bank lending environment, coupled with low insolvencies, gave most corporate leaders a false sense of security. Only a short time ago insolvencies were hovering around .5% worldwide, now we are seeing corporate insolvencies at 3%. From the first quarter of 2008 to the second quarter of 2009 commercial bankruptcies increased 208 percent. There were 58,000 commercial bankruptcies in the U.S. during the first half of 2009.

This has had a dramatic effect on the supply and demand of Accounts Receivable Insurance, also known as Trade Credit Insurance. With the insolvencies and the uncertainty we see the demand for Trade Credit Insurance is at an all time high, even though the market penetration for the product is still relatively low. More and more, companies are exploring the use of Accounts Receivable Insurance from Encharter Insurance to protect one of their largest assets, accounts receivable, from loss due to a risky customer and even relatively benign customers.

The past several years have seen a soft market for credit insurance. Premiums have dropped, while the insurers have become more and more competitive to gather as much business as possible. This trend is starting to change as the market for Trade Credit Insurance hardens. We are now seeing premiums increase; however the premiums now being charged are still lower than the cost of Accounts Receivable Insurance offered in the 1980’s and 1990’s.

With premiums on the rise for Trade Credit Insurance, calling Encharter Insurance today at 888-865-1244 to discuss getting your business set up with a Trade Credit Insurance policy is a smart move. You can also visit us on the web to request a quote for Accounts Receivable Insurance or any other Commercial Insurance product 24/7 by visiting our website at http://www.encharter.com/

At Encharter, “It’s all about protecting you!”