Credit insurance in hot demand
Demand for credit insurance is rising fastest in nations hit hardest by the worldwide recession, including the United States, the chairman of credit insurer Coface said in an interview.
Francois David told Reuters on Friday that countries confronted with bubbles in their property and consumer debt markets are lining up to buy the product, which protects sellers of goods and services if customers don’t pay their bills.
U.S. companies, which have not typically been large buyers of the protection, are getting on the bandwagon, shifting from handling credit risk internally to outsourcing it to companies such as Coface, he added.
Coface’s figures show that one in 10 U.S. firms is now buying the protection, double the rate of a year ago.
So far, the U.S. market is dominated by European players, which have moved in after becoming well-established in their home region.
Coface, which is No. 2 in the United States after French rival Euler Hermes, saw a 60 percent surge in applications for coverage from U classic car insurance.S. companies in 2008, said Michael Ferrante, president and CEO of Coface North America.
“We are seeing an unprecedented increase in the product,” Ferrante told Reuters.
David added that Coface expects its market share in the United States to increase. Companies in the UK, Spain and Ireland are also buying more protection, he said.
Hand in hand with the increase in demand, credit insurance providers are charging more for coverage. David said rates are up about 20 percent worldwide.
Coface sells credit insurance in more than 60 countries and also is expanding its credit-rating business, including in emerging markets.
Coface is a part of French investment bank Natixis. Like its largest rivals, Euler Hermes and Atradius Finance GCOXF.UL, Coface counts on the European market for the bulk of its business.
(Reporting by Lilla Zuill; editing by John Wallace)
Filed under: marketing by TheDoor