Canada’s licensed trade credit insurers show increase in incurred losses on Canadian policies

Recently released figures from Canada’s eight licensed trade credit insurers, including Crown corporation Export Development Corporation (EDC), show a marked increase in incurred losses on Canadian policies, according to brokerage firm PBL Insurance.

Russ Parker, vice president of trade credit risks at Toronto-based PBL Insurance, said in a press release on Friday that official numbers posted by the Office of the Superintendent of Financial Institutions and EDC show that that net premium/loss ratio for Canadian insureds (after reinsurance and adjustment fees) hit 105% in the first half of 2015, after more than $111 million of claims were incurred. This is just $17 million less than for the entire 2014 year, Parker said in the release.

The three largest insurers in order of size had loss ratios of 122%, 124% and 85%.

PBL Insurance said that the insolvencies of US Steel Canada and Target Canada and the “commodity and currency crosswinds in global trade, as well as political risks in Russia,” contributed to the impact. “Insurers report an increase in non-payment notifications in China and the filing of claims across a number of important trade sectors throughout the Americas, especially within Brazil, Mexico and Canada,” the release said.

The Canadian trade credit insurance market is seeing strong growth, with direct premium volumes up 8% for the year of 2014 and 8% for the first half of 2015. Pricing remains competitive and has trended down for the past five years, with coverage levels being maintained above those of the 2007 peak.

PBL Insurance also reported that pricing and terms offered in the marketplace “are not indicating any marked tightening in underwriting at this point, but vigilance is increasing.”