Supply chain as key risk factor
Inevitably, there will be a standstill of the supply chain which will cause a domino effect on the economic situation. Many companies are expected to experience a marked drop in turnover and revenue, with the consequence for many being insolvency.
Credit insurance reactions to immediate economic and trade downturn
The credit insurance market is expecting a significant increase in payment defaults and insurers have started to implement plans to review and reduce their insured exposures. Organisations need to rely on their broking advisor to implement pro-active credit limit maintenance processes to help ensure their insurance programmes weather these turbulent times.
Financing could also become an issue in the longer term as banks and financial institutions perceive some businesses as too vulnerable to lend to. COVID-19 will only heighten that sense of banking caution and they will be looking for additional security when lending money, which is where credit insurance can play a larger role in terms of insuring a business’s trade receivables.