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Trade Credit Insurance in South Africa

Published OnMar, 2014
Pages25
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FormatPDF + Excel database
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Trade Credit Insurance in South Africa is a report about the market for trade credit cover in South Africa. In addition to documenting the development of the market value from 2009 to 2013, the report also divides it for the most recent year between four key segments: between small companies with an annual turnover of less than USD 5 million and larger companies with a turnover above this threshold; between single-risk and annual policies; between export and domestic trade credit insurance; and between protection acquired for political risks and cover bought for business risks.

These unique market splits are based in part on a survey of leading brokers of trade credit insurance in South Africa. This same survey also identifies the underwriters of this type of cover used by brokers on a regular basis, gives an input into Finaccord's estimates for the market shares of underwriters of trade credit insurance in South Africa, provides a basis for commentary surrounding distribution channels used for this type of policy, and informs Finaccord's forecasts for the market value through to 2017.

Key features of this report include:

- quantification of the market size for trade credit insurance in South Africa: how much is the market worth, how has it developed since 2009 and how does it break down into key segments?

- presentation of the actual or estimated market shares of underwriters of trade credit insurance in 2013 based on both the broker survey and other available data sources, plus identification of leading brokers of this type of cover;

- audit of the frequency of usage of underwriters by major brokers of trade credit insurance in South Africa: to what extent are competitors effectively challenging the main incumbent underwriters?

- availability of an accompanying PartnerBASE™ dataset that logs partnerships for trade credit insurance identified by Finaccord across a combined total of over 40 leading banks and major trade associations;

- forecasts for the market for trade credit insurance in South Africa and how it will split between domestic and export trade credit cover: what is this sector likely to look like in 2017?

Executive Summary

Introduction

South Africa

List of Graphics / Tables

0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION

What is this report about?
Rationale
Several factors underpin the rationale for the production of this study
There are several distribution channel options in addition to brokers
Globally, trade credit insurers cover over USD 2 trillion of commercial credit exposures
The report provides a standardised analysis of important metrics for trade credit insurance
Methodology
Research program
Market data analysis
Definitions
Trade credit insurance
Single-risk and annual policies
Export and domestic policies
Political and business risks
Premiums
Abbreviations
PartnerBASE
Finaccord

2.0 SOUTH AFRICA

Introduction
Market size, growth and segmentation
South Africa's trade credit insurance market edged up in every year between 2009 and 2013...
... although the trend for declining claims ratios up to 2012 is likely to have reversed in 2013
A substantial percentage of the total market value is attributable to small business customers
Most brokers of trade credit insurance do not intermediate single-risk policies...
... although all are active in export trade credit insurance for which an open market exists
The value of South African exports slumped in 2009 but has gradually recovered since then
A fairly well-established market exists for political risk cover in South Africa
Factoring as a complementary / substitute product
The value of South Africa's factoring market has moved up substantially in recent years
Underwriter market shares
CGIC remains a very clear market leader in South Africa…
... in spite of the acquisition-led entry of Coface in 2005
Underwriters at Lloyd's of London are used occasionally but only ever for trade-related political risk cover
Distribution channels
Cinque and Niche International Brokers are important players in trade credit insurance broking
A couple of banks intermediate trade credit policies but no trade associations do so
Future outlook
Export-related trade credit insurance is expected to outpace domestic risk cover up to 2017

3.0 APPENDIX

Brokers participating in the survey

LIST OF GRAPHICS / TABLES

TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY

Key market data for trade credit insurance in South Africa

1.0 INTRODUCTION

2.0 SOUTH AFRICA

Gross written premiums for trade credit insurance in South Africa, 2009 to 2013
Premium income paid by small companies with an annual turnover of less than USD 5 million as a proportion of the total market for trade credit insurance in South Africa, 2013
Premium income paid for single-risk policies as a proportion of the total market for trade credit insurance in South Africa, 2013
Premium income paid for export trade credit insurance as a proportion of the total market for trade credit insurance in South Africa, 2013
Values of exports and imports and split of GDP by sector in South Africa, 2009 to 2013
Premium income paid for political risk cover as a proportion of the total market for export trade credit insurance in South Africa, 2013
Total factoring market value in South Africa, 2008 to 2012
Estimated market shares of gross written premiums of trade credit insurance underwriters in South Africa, 2013
Frequency of usage of specific trade credit insurance underwriters by brokers in South Africa, 2013
Forecast gross written premiums for trade credit insurance in South Africa and the proportion due to export trade credit insurance, 2017
Forecast segmentation of gross written premiums in South Africa between domestic and export trade credit insurance, 2017 (table)

3.0 APPENDIX

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