December 2020: CIN

2020 brought new challenges to our industry, but we recognise there is much to be thankful for:

"This year we’ve seen trends that have been emerging for some time accelerate due to the pandemic and subsequent lockdown. Although there will be an inevitable bounce-back as things get back to ‘normal’, some trends will have become deeply ingrained. Business’ ability to adapt to the new world will be the key to their survival and we are likely to see significant casualties along the way. In the short term, 2021 is gearing up to be stop-start as a vaccine roll-out is implemented and a new trading arrangement with the EU is navigated. There will be plenty of bumps in the road as we get back to normal, whatever that might be."
Ian Selby, Head of UK Trade Credit. Nexus Trade Credit

“Inevitably, pandemic lockdowns slowed and stalled global trade, with creditors and debtors finding themselves in the same boat: fishing for cash. Of course, government financial support kept many businesses afloat. For creditors chasing payment, limited sanctions existed with the postponement of legal action, enforcement, and insolvencies. Debt collection agencies remained open and used forbearance to give debtors longer to pay than usual. For those debtors reliant on their creditor’s goods, most found the money and protected their supply chain; heightened goodwill was apparent thanks to a shared problem none had experienced before. Vaccines will hopefully close the Coronavirus chapter, with open trading returning in 2021 when Brexit looks set to provide a new chapter to challenge business.”
Colin Thomas, Chairman, STA International Limited.

The massive public support programs across the globe have been essential to avoid the forecasted chaos for 2020. Labour, social and financial support programs have significantly reduced the number of awaited bankruptcies. Eventually, by year-end, the TCI industry in most OECD countries should have dealt with low loss ratios compared to expectations in March 2020. Although the vaccine announcements have boosted economy actors’ optimism, 2021 will still be partially or fully a COVID year. When recovery from the virus will be in sight, and emergency public funding will end, it will very likely unleash waves of failures and bankruptcies, striking mostly SME. This gives TC insurers, in cooperation with governments and other financial actors, few months to prepare themselves to cope with this forthcoming black period."
Marc Meyer, Tinubu Square SVP Subject Matter Expert Insurance

"Reflecting on 2020 I recall a quote I referenced recently, ‘the only thing certain in life is uncertainty’. This is true of this year, with the undeniable economic and social impact the pandemic has had. We are witnessing unprecedented challenges, with Arcadia Group and 200+ year old retailer Debenhams becoming two of the major business casualties of the pandemic. Government intervention in areas such as furlough, government backed loans and the support scheme for the Trade Credit Insurance industry, will likely have an effect for many years to come. Though it’s looking like a rocky road ahead, we have seen amazing kindness this year, and believe we will overcome future challenges with the same togetherness and compassion." 

Jonathan Smith Strategic Director – Trade Credit & Surety T L Dallas & Co Ltd.

“2020 was the year when credit insurers took the lead in fighting the economic pain of COVID-19. Through an innovative cooperation with governments, credit insurers fulfilled their social responsibility in holding the supply chain open, saving tens of thousands of jobs in the process. Once again, the credit insurance community has demonstrated how much the economy relies upon them to keep the wheels of trade turning.”
Mike Holley, Business Development Consultant. Charles Taylor Adjusting.

At this stage, we already see the spillover effects on the global economy of what was first of all a worldwide health crisis. Credendo expects a sharp rise in payment default and a recovery that is likely to be uneven across countries and sectors. At a sector level, the most affected sectors such as airlines, tourism, automotive, oil and gas will take time to recover. Food and health sectors, e-trade and tech industry perform somewhat better. This crisis can prove an accelerant for global trends like economic nationalism, greater digitalisation and increasing green awareness.”
Kerlijne Van Steen, Head of Single Risk, Credendo.

"To say 2020 was a challenging year is an understatement. This year Craig Bonnell of Global Commercial Credit, George Poon of AIG and my friend and mentor John Pellew of Euler Hermes all passed away, well before their times, leaving a huge void in our industry and our hearts. As we navigate through near- and medium-term uncertainty our clients will demand more from us where the old way doing things will not be enough. Technology will continue to be a driving force and necessity for client satisfaction in 2021 and beyond. We collectively learned a lot in 2020 and I am very bullish for our industry’s prospects in 2021."
Todd Lynady, Managing Director and Global Head - Insurance Sales & Business Development. LiquidX.

"2020: The ‘year of COVID’ – characterised by grounded airlines, docked cruise ships, empty hotels and shuttered retailers. A surreal aesthetic accompanied by a very real decline in global GDP. Despite this, governments around the world have responded to support businesses and have so far managed to avoid an expected avalanche of insolvencies. Credit insurance has been cast into the spotlight and has performed well, with commendable cooperation between public and private sectors. 2021 will be the year of reckoning. Claims will rise, although how much depends on developments going forward and the transition away from support schemes. The industry is robust and there are opportunities, as well as challenges ahead."
Vinco David, Secretary General of the Berne Union.

"2020, it’s difficult to know where to start without stating the obvious, it’s been tough! But, out of adversity comes innovation and the opportunity to bounce back stronger, which is why we launched Ko-bolt. To my surprise the late payment experience in 2020 has been very low in some unexpected sectors like construction, and in particular building supplies companies. BUT, all of the business leaders I speak to agree that this is the calm before the storm and now is not the time for complacency. 2021 will be tougher still as the furlough scheme comes to an end, we exit the EU and we start to deal with the aftermath of the virus." 

Karl Hague, CEO & Founder. Ko-bolt.

“As one year draws to a close it is usually a good time to reflect on what that year has brought, to look back on achievements and accomplishments but also lessons learned. This year has of course been different to all others, and we have all had to draw on vast resources and show great resilience to reach this point. The way we have adapted as a business, as an industry and as people will stand us in good stead for the huge challenges of Brexit, the eventual tapering of Government support for the economy and the re-emergence of a post-pandemic world in 2021.”
Sebastian Rice, New Business Manager – Trade Credit, QBE European Operations.

"Remember the start of 2020 when the UK ratified the Withdrawal Agreement and actually exited the EU? No, me neither. What a year it's been for all of us and I don’t think I will be alone is wishing it good riddance. The discovery of the magic money tree has meant that the credit insurance industry wasn’t confronted with the tsunami of claims we might have expected. Despite the current low levels of corporate insolvency, the end of the furlough scheme and the expiry of the government support scheme (I assume in June 2021), next year is almost certainly going to be even more challenging than 2020. And that’s without a No Deal final exit from the EU."
Derek Barnett, Director. W. Denis Credit Risks Ltd.

"In 2020 profit warnings rocketed, doubling to 760; retail and dining chains collapsed; secured lending fell 25%; GDP declined 10%: but insolvencies fell! In the last 2 days of November, 57 companies filed for insolvency in the Courts, a 3-fold increase in the run rate. 2021 insolvencies will include unmaterialised insolvencies from 2020 (those delayed by stimulus) plus the natural 2021 insolvencies, and insolvencies resulting from COVID-19 impact on trading. 2021 will be too early to see the insolvencies resulting from additional debt, but insolvencies will surge. Suppliers who don’t have Credit Insurance will be bracing themselves for a period of unprecedented losses, exacerbated by the resumption of Crown Preference."
Greg Connell, Managing Director, InfolinkGazette.