| Understanding the synergy between factoring and trade credit insurance: tailoring solutions to meet corporate needs Neal Harm, FCI Secretary General 14 | The future of Credit Insurance: Embracing AI for strategic advantage André Dusing, Atradius 18 | The power of recognition of female talent in the Credit Insurance industry Raluca Ezaru, ICISA
Disclaimer
All articles in the ICISA Insider represent solely the opinions of the individual authors, not ICISA, unless otherwise stated. Original articles appearing in the Insider may not be reprinted without the express permission of the author and ICISA. When citing articles, please refer to the title of the article, the author, and the relevant edition of the Insider, including a full url to the article page.
Foreword
Dear Reader,
As we welcome the vibrant season of autumn, I am pleased to present this edition of our magazine, filled with insightful discussions and critical updates relevant to our industry.
Earlier this season, ICISA held its committee meetings in Rotterdam, where participants engaged in lively debates on pressing topics affecting our sector. These discussions not only increased collaboration but also highlighted the importance of addressing the evolving challenges and opportunities within the credit insurance and surety landscape.
A key matter of interest lately is the publication of EBA report on the use of credit insurance by banks, which is part of the broader implementation of Basel rules in the EU. The EBA decided against recommending an alternative approach for banks using credit insurance for credit risk mitigation. This topic now moved to the European Commission, which must balance financing the real economy with the need for competitiveness and innovation, while considering the EBA’s strict adherence to Basel standards.
In this issue, I am excited to feature an interview with our newest member, Renaissance Re, on page 20. This discussion provides valuable insights into their initiatives and contributions to our community. We also highlight an important article on the recognition of female talent within our industry on page 18, emphasizing the power of diversity in driving innovation and success.
Additionally, we explore the impact of artificial intelligence in the trade credit insurance sector on page 14, examining how AI is reshaping our practices and influences our industries. We look at the collaboration between factoring and credit insurance on page 10, discussing how these sectors can work together to improve financial solutions for businesses.
There is much more to read in this edition of the Insider, so I hope this autumn edition inspires you and offers actionable insights to advance your work. Together, let’s continue to embrace innovation, champion diversity, and enjoy the evolving landscape of our industry.
Warmest regards, Richard Wulff
Rethinking ESG for developing nations
Column by Mahesvaran Moopanar, Nordic Guarantee
This year marks the 20th anniversary of the UN report "Who Cares Wins," which is widely recognized as shaping the core principles behind Environmental, Social, and Governance (ESG). This framework has become essential for sustainable investment and business practices. While ESG is increasingly embraced in developed countries, its implementation in developing economies presents unique complexities that require a tailored approach. Although ESG aims to promote sustainability and ethical practices, its application can have unintended negative consequences, particularly for resource-rich developing nations.
Let’s take the recent crisis in Ukraine as an example. It highlights some of the contradictions we see in how ESG is applied. When the crisis hit, European governments were quick to focus on energy security, which meant going back to fossil fuels to cut down on their dependence on Russian gas. In the immediate aftermath, European economies recommitted to ESG principles, however, this comes at a cost for developing nations that rely on fossil fuels to meet their energy needs. You can really see this playing out in the surety industry, where there’s pressure to purge fossil fuel exposure from investment portfolios. Unfortunately, this is a challenge for surety providers in these resource-rich countries who support industries and sectors tied to the fossil fuel industry. This does prompt the question: shouldn't we consider the unique challenges developing nations face when it comes to meeting ESG goals?
Unfortunately, peers in the surety industry seem to think that every country should follow the same ESG rules. This onesize-fits-all approach can actually hurt developing countries, especially those that rely on their natural resources to fuel their economies. I’ve seen this firsthand in South Africa, where finding the right balance between environmental goals and social needs is so important.
South Africa grapples with chronic energy shortages characterised by prolonged blackouts. It currently depends heavily on aging coal infrastructure for a major part of its energy production. Whilst, moving to renewable energy is vital for long-term sustainability, the urgency of this shift can sometimes overlook the immediate needs of millions of South Africans. If we push too hard to abandon coal just to tick ESG boxes, we might end up worsening the energy crisis, especially for marginalized communities.
This is why prioritizing reliable energy delivery is key—even if it means taking a step back on some ESG objectives for a bit. In addition, focusing solely on environmental goals can sometimes blind us to important economic factors like job creation and energy affordability. A rapid shift away from traditional energy sources could lead to significant job losses and economic instability, which everyone wants to avoid. In short, while it’s important to align with ESG principles, we need to do it in a way that’s realistic and considers the immediate challenges of energy security and economic stability. Instead of viewing ESG as a rigid framework, we should embrace a more flexible approach. This might mean setting achievable, incremental goals for renewable energy, investing in technologies that make existing coal plants more efficient, and promoting energy diversity.
Ultimately, the aim should be to strike a balance where developing economies can meet their urgent energy needs while gradually moving towards a more sustainable and equitable future. Until then, we must recognize the complexities of implementing ESG in resource-rich nations, ensuring that environmental aspirations don’t come at the cost of social stability and economic growth.
ICISA Committees updates
Credit Insurance Committee
Stefanie Koch
In our next committee session, we have several interesting topics lined up for discussion. I would like to draw particular attention to one critical subject: fraud. This topic was introduced by ICISA during the autumn meeting, where several recent fraud cases were summarized. These cases pose significant financial risks, potentially costing trade credit insurers and reinsurers millions of dollars. Fraud in trade can manifest in various forms, including fake invoices, counterfeit bills of lading, collateral fraud, and duplicate financing. Conducting due diligence is challenging since trades are dynamic, constantly evolving throughout the trade term. The rise of digitalization in recent years has further increased fraudulent activities. While fraud committed by policyholders is generally excluded from trade credit insurance policies, proving such fraud can be extremely difficult. On the other hand, fraud by obligors is typically covered, albeit with certain exceptions. I look forward to exploring deeper into this topic during our working group discussions.
Although each credit insurer currently relies on its own fraud detection processes and tools, and provides services to its clients, we aim to explore the feasibility of an industry-wide solution. We will examine how market participants could collaborate effectively without breaching data privacy, antitrust and confidentiality regulations. Additionally, we will discuss the role and potential of AI in fraud detection, considering its application at various stages of the value chain, including policy wording, underwriting, and risk monitoring. This is an exciting area of development, and I am enthusiastic to continue our work on it.
Furthermore, I want to highlight the important progress made by the Working Group on banking-insurance relation, with the publication of a white paper being imminent. The white paper focuses on understanding the motivations for banks to engage with trade credit insurers, along with the associated
Stefanie Koch, Vice-Chair of Credit Insurance Committee
risks and challenges. This paper is a comprehensive summary of the experiences shared by committee members when insuring banks and explains the most commonly used products. Upcoming committee meetings will also discuss the developments and broader implementation of global Basel standards into regulation. We appreciate the diligent monitoring and mentoring work done by the ICISA team in this regard. I encourage everyone to follow and read the timely ICISA publications on this topic.
Finally, the focus of a growing number of committee members will be on Mega trends in the credit insurance industry. We will build on the very fruitful exchange we had during the spring meeting, particularly on the topics of AI and ESG. During the spring meeting, there was a remarkable presentation on AI, with a specific emphasis on the rapid development and proliferation of Generative AI tools in the market. These tools are already very much present in today’s underwriting of trade credit insurance. The growth in this area is impressive, and credit insurers are closely monitoring the accuracy of these tools, a topic we will continue to address in our committee meetings.
On the topic of ESG, we had an insightful presentation on how ESG principles impact underwriting and portfolio management. Insurers are not only aiming to reduce their own operational carbon footprints but also encouraging their clients to decarbonize their businesses. The Credit Insurance Committee will examine deeper this subject, exploring how collaboration with reinsurers could evolve to align and optimize ESG strategies and measures on both sides. We will also explore how to advance ‘SG’ topics.
I am enthusiastic about the upcoming discussions and the progress we will make on these important topics. Stay tuned for more updates and insights from our committee sessions.
Surety Committee
Jennifer Klein
The recent Surety Committee (SC) session in Rotterdam was noteworthy, being the first co-hosted by Vice Chair Isidra Fermin Vazquez and myself. Following this session, I was asked, "What do you see as the most prominent discussions in your committee for the coming months? Could you elaborate on why?" Looking ahead, the Surety Committee will focus on several key topics that are crucial for the industry's future. From our recent Autumn meeting, three major discussions have emerged: digitalization and AI (Artificial Intelligence), cooperation with banks, and ESG (Environmental, Social, and Governance) considerations. These are vital for the continued growth and adaptation of the surety industry.
Digitalization and AI: embracing the future
Digitalization and AI are significant trends in the surety industry. The committee sees digitalization as a driver for investment in the eurozone, potentially boosting demand for bonds. However, there is a lack of standardization in this area, which makes it essential to establish clear guidelines and frameworks. While AI's future impact is acknowledged, participants admit they are not yet experts. Internally, some companies are using AI tools to improve efficiency and data quality, but generally, discussions are fragmented, especially regarding digital signatures and document issuance. The committee has emphasized the importance of addressing local data privacy laws and potential issues related to digitalization.
Cooperation with banks: A strategic partnership
Cooperation with banks is a confirmed trend, particularly in Europe, driven by inflation and high interest rates, which significantly impact contract and bond amounts. As capacity becomes scarcer and banking regulations become stricter, banks are increasingly looking to share risk. This presents an opportunity for surety providers to collaborate with banks from the outset, ensuring fair terms
Jennifer Klein Chair of Surety Committee
and mutual understanding. Benefits for the banks will be capital, exposure or risk relief. Two standard frameworks, the Loan Market Association (LMA) documentation and the Master Risk Participation Agreement (MRPA), are commonly used in these collaborations. While cooperation with banks is beneficial for risk sharing, it is important to distinguish it from risk avoidance, especially in cases of deteriorating or defaulted risks.
ESG considerations: A growing priority
ESG considerations are gaining significant importance in the surety industry. The committee has observed a rising awareness of sustainable underwriting policies, especially in sectors like coal, oil, and gas. Discussions on ESG impact vary across markets, covering topics such as rehabilitation bonds, fracking, and new technologies, with a primary focus on environmental aspects. Additionally, there's a growing emphasis on social and governance factors, including human rights and biodiversity. This shift is opening new business opportunities, such as bonds for protection of migrant workers. The committee is also exploring avenues for growth through access to EU grants and loans, and how decarbonization can influence pricing indices.
Conclusion
In conclusion, the SC session in Rotterdam was highly productive and insightful, addressing numerous current industry challenges. Although answers to big questions like AI's future role remain elusive, the consensus is that the industry's complexity demands vigilant underwriters who can adapt, learn, and draw comprehensive conclusions. These discussions will continue to shape the surety sector's future, reflecting the committee's dedication to enhancing community resilience and adaptability. I extend my sincere thanks to all participants for their valuable contributions and look forward to our next meeting.
Credit and Political Risk Insurance Committee
Pierre Lamourelle
This is a long list of heterogeneous topics that are keeping the CPRI market underwriters awoken at night, and these topics are a very good illustration of what is on the agenda of the CPRI Committee today and for next year. Let’s summarize and try to narrow down this list to the most relevant and material topics: Basel IV and wider implications of Basel rules, ESG, new low carbon technologies, Commodities, elections, geopolitical tensions, trade war, war, global uncertainty.
Macro perspective: 2024 has been and will be a busy political year. European voters have elected their EU representatives; Portuguese, Belgian, Austrian, Indian, Mexican and UK voters have elected or will elect their MPs. This is without mentioning the heavily scrutinized US elections, Mexico and Taiwan which have elected new presidents. Amid rising populism with a lot of uncertain ballots and ongoing conflicts in various parts of the world, households and firms have adopted a wait-andsee approach and postpone key economic decisions from large purchases to major investments.
Basel IV and its implications: The European Banking Authority (EBA) has released its long-awaited recommendation on the treatment of credit insurance as a credit risk mitigant (CRM) tool under the Basel regulation. The outcome is relatively disappointing as EBA is recommending the application of a 45% LGD to credit insurance. Main argument is that they do not want to create a precedent with other instruments and EBA still wants to limit contagion channels between banks and insurers.However, it is worth mentioning that EBA is not denying the effect of credit insurance as a CRM tool. Even if the technical discussions are now over after years of discussions and information shared by the different market associations, lobbying efforts are not over and final decision will be taken by the Commission (and validated by the Parliament). There is still some hope that the Commission may reduce the impact for banks to maintain competitiveness and access to finance.
Pierre Lamourelle
Vice-Chair of Credit and Political Risk Insurance Committee
ESG / new low carbon technologies: In a world of mounting geopolitical tensions and intensifying climate change, critical infrastructure is particularly at risk of disruption. Recent events have shown how vulnerable industry, energy and transport services can be to conflict or damage from increasingly frequent heatwaves, floods, storms and droughts. According to Global Infrastructure Hub, there is an estimated financing shortfall of USD1.5trn for infrastructure investment in Europe, based on infrastructure needs (USD10.6trn) and current investment trends. The CPRI market is already experiencing a surge in requests for projects involving low carbon technologies to facilitate the transition path to the net zero target. These critical projects often come with their complications as they involve new technologies with limited track record. This is a very challenging environment for underwriters which require a swift adaptation and better understanding of the most efficient technologies.
Trade war / Supply chain bottlenecks: Geopolitical tensions pose downside risks to the global economy and is adding challenges to CPRI underwriters. There is clearly a surge in uncertainties, from protectionism to high political uncertainty in major European countries and ongoing conflicts in Russia-Ukraine and the Middle East, including tensions in the South-China-Sea and with Taiwan. This is a constantly moving environment which requires proactive adaptation from underwriters.
The CPRI committee will be monitoring the evolution of the above topics and maintaining an open dialogue with its members, with a view to learn from each other, share best practices and maintain the attractiveness and relevance of our market solutions for our clients.
Committtee of Underwriters
Emmanuel Cortyl
The Committee of Underwriters has achieved significant realisations in recent months, producing two high-level papers through working groups formed by its members. These two papers address: 1) the issue of cancelable credit limits as a potential mitigant to systemic risk, and 2) the management of cumulated risk exposure within the industry.
These two documents will undoubtedly support ICISA in its advocacy and communication efforts. Looking ahead, the Committee of Underwriters will be tackling several important and prominent topics in the upcoming months:
US presidential elections: The return of Donald Trump to power will have profound consequences, altering the geopolitical and economic situation around the world. The announced protectionist measures, the expected intensification of tensions between China and the US, and the US future policy on the conflict in Ukraine, will all lead to significant changes that will affect international trade and diplomatic relations. These developments will likely create many new risk scenarios, prompting substantial discussions among committee members regarding both commercial and political risks.
Artificial Intelligence: A fascinating presentation by André Dusing from Atradius in Rotterdam, has opened the door to ongoing discussions on AI. With its rapid evolution, AI’s impact on data collection, data reliability, automated risk analysis and underwriting support is vast. The implication of AI driven business models transformation across industries are also significant. Given AI’s fast-paced development and high impact on our industry, the committee will continue to focus on AI to increase awareness and deepen members’ knowledge.
Emmanuel Cortyl Chair of Committee of Underwriters
Construction sector: This sector is a significant driver of economic activity in many countries but represents a major risk for our industry. While construction is facing difficult times in many countries, the reasons behind these difficulties vary from one country to another. As members of the Committee coming from various locations exchange insights, they offer a more nuanced view of local conditions, helping the Committee to have a better and finer understanding of the risk triggers across different markets.
Fraud: Lastly, the launching of a new working group on fraud, a topic shared with the Credit Insurance Committee, adds another area of discussion. Fraud is consistently identified by primary insurers and reinsurers alike as one of major claims cause, making it a particularly relevant topic for discussion.
We look forward to engaging in these exciting and important discussions in the next Committee of Underwriters meeting.
Understanding the synergy between factoring and trade credit insurance: tailoring solutions to meet corporate needs
Article by Neal Harm, FCI Secretary General
Although I am now running a global trade finance network of financial institutions, I had been a banker for the prior 30 years of my career. During that time, I gained a very good perspective on the financial needs of corporate CEOs. Throughout my career, I was consistently asked about trade credit insurance as a product for the CEO. Most CEOs would ask me how I viewed a given credit insurer as my competitor. Can you compete with them? Which is more valuable? Are you cheaper than them?
Define the need
My response to the CEO was then a question: “What do you like driving better, a Range Rover or a Porsche?” In most cases, the response would be “Porsche”, as they immediately think about speed and sleek lines. But, I then ask, what if we were heading out for a hunt versus going for a drive on the autobahn? “Ok, the Range Rover.”
One vehicle is not better on its own, but each is built with a purpose. Are we trying to get there fast, or make it in and out of the forest?
So, back to the conversation with the CEO, the real question is, “What is your commercial need?” The comparison is really a rugged battle-tested 4x4 vs a sleek, heart-racing, jump-off-the-line machine. However, they serve different purposes, and the CEO must decide on the commercial need.
Like these car types, there is a fundamental difference between factoring and credit insurance. The difference between them comes down to the commercial need and the service required. Factoring is a trade finance or working capital solution for suppliers, whereas credit insurance
protects a supplier from the risk of non-payment from its customer. There are nuances within each product, but that is the fundamental difference.
One enables the other
Like the CEO’s comment to me, I have been approached in my new role with, “I am surprised that FCI has credit insurers and/or brokers as members of FCI.” However, the reality is that the industries complement one another and even enable each other in business transactions.
As stated by one of FCI’s members, Allianz Trade:
“Allianz Trade works extensively with factoring companies and banks worldwide to provide credit insurance solutions which enable non-recourse receivables financing. These products go hand in hand together, offering an integrated approach to credit protection - providing the financier with the confidence to facilitate increased lending, thanks to enhanced risk mitigation, along with tools to make betterinformed decisions. Through this partnership approach, factoring supported by credit insurance boosts the financial resilience of companies and enables international trade.”
This statement supports the survey recently published by Allianz, Testing Resilience Allianz Trade Global Survey 2023, which speaks to the needs of corporates, especially around exports. In that study, 40% of the exporters were concerned about the risk of non-payment in the coming year. Separately, the expectations by those exporters that payment terms will increase went from 31% to 42% of the respondents. This is precisely where factors and credit insurers work together for those exporters to be successful. The factor will provide the working capital needs and potentially the debtor risk. Credit insurance will focus on exporters who want to address their concerns about debtor non-payment. Understanding those needs is critical when determining what product makes the most sense for a client.
In many cases, the client may utilise a combination of factoring and credit insurance. This is very common depending on the distribution of sales across the globe or industries that are being sold to in certain markets. The factor may manage all the debtors for dunning, collections, and payments. This oversight of the accounts receivable by the factor will bring the insurance policy owner an added sense of comfort. Many factoring companies have a high level of experience in managing credit insurance policies to ensure the proper process and procedures are followed as outlined in the policy.
Factors use credit insurance
Not only are Factors and Credit Insurance companies key partners for commercial clients, but they also directly support each other. Crédit Agricole Leasing & Factoring, a member of FCI, leverages trade credit insurance to support its business for its clients. “Working with credit insurers is essential for factoring companies, as we not only outsource the risk to the insurer but also purchase the necessary credit expertise. For strategic reasons, we have chosen to work with several credit insurers at the same time, so that there is competition and some risks cannot be borne by one insurer alone.” – Jens Hoter, Branch Director. Factoring companies, as do commercial clients, utilise trade credit insurance to manage and mitigate their risk.
Factoring is a full-service approach to the working capital needs and risk mitigation associated with exporting products. It provides a service of debtor management, financing, dunning, collections, and potentially non-recourse purchasing of the invoice. In certain industry segments, factoring is a more common method of managing working capital. In others, it is split between factoring and credit insurance.
For some factors, they utilise trade credit insurance to complement their back offices of credit managers. In contrast, others solely use trade credit to mitigate their risk to the debtors in a trade transaction. This decision comes down to scale, industry segment, and risk appetite of the factor. I have run various factoring portfolios and companies, and each has a different view on this risk-based approach.
Risk mitigation vs selling the asset
The most significant difference between factoring and trade credit insurance is on the balance sheet. Is the CEO or CFO looking to sell down the risk of trade credit or mitigate it? This goes back to “Are you looking for a Range Rover or a Porsche?” It is important to understand the need or the goal. With factoring, the assets of Accounts Receivable can
be sold to the financial institution, which replaces the assets with cash. With trade credit insurance the asset remains on the books of the company but is mitigated by the underlying policy that is held by the company. There are two different ways to manage the company’s assets.
Ultimately, a symbiotic relationship
Across trade finance, factoring and credit insurance have a symbiotic relationship that goes beyond commercial transactions. We work very closely together within the wider banking industry on regulatory efforts like Basel III. These types of regulatory programmes have a significant impact on our collective clients of both corporates and financial institutions. Specifically for Basel III, it benefits both industries to have the proper allocation of risk-weighted assets within the capital reserve calculation. This is an area where our two industries work together to help both corporates and financial institutions.
So the next time you are thinking about trade credit insurance and factoring, determine the ultimate need of your company. Then, meet with both to develop a plan to support your trading needs.
A Guide to Trade Credit Insurance
By the International Credit Insurance & Surety Association
A
practical and accessible industry-wide
reference on Trade Credit Insurance, written by a team of industry experts.
This compact volume is a practical guide for anyone interested in Trade Credit Insurance. The International Credit Insurance & Surety Association (ICISA) presents an approachable but detailed guide written collaboratively by carefully selected industry experts. The guide describes the lifecycle of the credit insurance product, from the initial application stage to the expiration phase of the policy, including practical use aspects for credit managers. The volume offers compact information on the history of trade, the need for protection against trade credit risks, and solutions offered by credit insurance providers. The focus is on short term credit, including whole turnover policies and single risk policies.
Readership
Suitable for anyone interested in Trade Credit Insurance, from credit managers to policymakers.
Importance
• Collaboration of a diverse group of experts from top organisations around the world
• Written in an approachable style, accessible to the non-specialist
• Includes extended glossary of key terminology
• Includes a list of relevant resources for further reading
Content
Foreword; Introduction; Disclaimer; 1.What is trade?; 2. What is trade credit insurance?; 3. Product types; 4. Risk types; 5. Typical set-up of a trade credit insurance contract; 6. Premium, the price for cover; 7. Day-to-day policy management; 8. Buyer risk underwriting in trade credit insurance; 9. Debt collection; 10. Imminent loss and indemnification; 11. Renewal, expiry, termination of a policy; 12. Single risk business; 13. The single risk insurance market: Private and public players; 14. Reinsurance of Trade Credit Insurance; Trade Credit Insurance resources; Glossary of trade credit terminology
About the Author(s) / Editor(s)
The International Credit Insurance & Surety Association (ICISA) brings together the world’s leading companies providing trade credit insurance and surety bonds and their reinsurers. ICISA promotes technical excellence, industry innovation and product integrity, as well as addressing business challenges generated by new legislation.
Where to order my copy?
The book can be ordered from Barnes&Noble, Amazon and Bol.com
The future of Credit Insurance: Embracing AI for strategic advantage
Article by André Dusing, Atradius
ChatGPT and its derivatives have taken the world by storm. The ability to access the cutting-edge performance of Large Language Models (LLMs) through a simple chat interface has proven to be the killer app for Artificial Intelligence (AI). Billions are being invested by the largest companies around the world to improve upon the performance of our current LLMs to achieve continuously better results. However, it is good to remind ourselves that AI exists in many forms, some of which are more valuable for our uses than others.
At Atradius, we’ve leveraged various AI technologies for nearly a decade to enhance automation and efficiency in our operations. However, since the introduction of ChatGPT, the number of identified use cases has surged dramatically. Fully embracing AI in our industry promises significant innovation and process optimization, but it also requires strategic adjustments. This article delves into how credit insurers can best position themselves to maximize AI’s potential and why this is crucial. Additionally, we explore the opportunities and challenges AI brings to credit insurers, providing insights on how to address these to gain new strategic advantages.
The importance of AI in Credit Insurance
AI's strength lies in its ability to transform vast amounts of high-quality data into variable output for a given purpose –whether that is classification (i.e. decision), generation (e.g., text generation) or something else. Considering the central role that data takes in many credit insurance processes, it is obvious that AI could potentially improve some of the central processes of our value chain.
One basic and central example is the assessment of credit risk, which conventionally involves the meticulous analysis of financial data, credit data, context, and many other diverse sources of information. Traditionally, this process is often complex and time-consuming, requiring the processing of vast amounts of data by humans. AI promises to streamline this process considerably, if the data is available and can be
used to train AI models. This allows insurers to assess credit risks on the basis of effectively much more data for each assessment. AI models might also be sensitive to patterns and trends that might be missed by human observers, thus enhancing the precision of risk assessments. In turn, this can lead to much better underwriting performance.
Next to optimised performance, credit insurers can also not only use structured data (e.g., data in the form of tables with titles and descriptions), but also unstructured data, such as news or articles. AI can process this unstructured data much more effectively than years ago. Not only Generative AI (e.g., ChatGPT), but also Optical Character Recognition (OCR) and related technologies can help credit insurers in processing the vast amounts of news, annual reports and other sources that normally would require manual reading and analysis.
Consider that any process for which a good amount of highquality data is available, could theoretically be optimised to a certain degree by AI. Unlike other industries, where the storage and usage of data is still another hurdle for the adoption of AI, credit insurers particularly with their infrastructure for risk underwriting are almost set up to make use of this new technology to optimise their processes. But there is still work to be done.
Preparing for AI: A strategic imperative
Adopting AI involves more than just investing in new technologies. It requires a shift throughout strategy, operations, and culture. Credit insurers must recognise that AI is not simply a tool but a fundamental shift in the way business is conducted. The strategic imperatives fall into three main categories: data strategy, investment in technology, and upskilling the workforce.
The importance of a data strategy to train effective AI models
At the start of any AI solution is data. AI algorithms need to be trained on extensive datasets in order to generate accurate insights, predictions, and decisions. However, raw data on its own is not enough; it needs to be organised, cleaned, and made accessible in a way that AI models can be trained effectively. This is where a data strategy becomes indispensable. A well-defined data strategy will ensure that the right types of data are collected, stored securely, and managed consistently.
For example, AI models might use financial data, economic indicators, historical default rates, and customer profiles to be trained. Ensuring this data is standardised and correctly labelled allows the AI to draw relevant insights and deliver high-precision credit risk assessments. Insurers that adopt an ad-hoc or piecemeal approach to data management will struggle to gain reliable insights from their AI investments. A data strategy in practice will also often imply investments in underlying technical infrastructure, whether that is in cloud computing, data lakes or data analytics platforms.
Investment in technology
To prepare for AI implementation, it’s crucial to establish a robust technological infrastructure. Training AI models demands significant computational power, which can be provided by specialized computing clusters or cloud computing services. Insurers should leverage existing advancements by tech companies to lower the entry barriers for AI adoption. Beyond acquiring new systems, insurers must create an integrated technological ecosystem. This ecosystem should allow AI to seamlessly access and analyse data from current platforms and databases, enabling it to generate insights that enhance decision-making processes. Moreover, insurers must ensure that their data governance policies are robust. AI thrives on data, but the quality and accessibility of that data are crucial. Insurers will need to invest in cleaning, structuring, and managing their data in a way that maximises its utility for AI applications. This also includes addressing issues around data security, privacy, and regulatory compliance, as these will be critical in maintaining trust with clients and meeting legal requirements.
Upskilling the Workforce
While AI can automate many tasks, it does not replace the need for human expertise. On the contrary, AI's introduction will elevate the need for a workforce skilled not only in data analysis and AI systems management, but also the adequate use of AI-powered systems. Credit Insurers must invest in upskilling their employees to work alongside AI, such as underwriters interpreting AI decisions in the right context and conscious of its limitations. Given the niche nature of our industry, this will often involve training existing staff rather than recruiting new talent with specialised skills.
Additionally, a cultural shift will be needed within organisations. This mindset shift is crucial, as AI can often be associated with job loss and other criticisms that are not always warranted. This kind of change resistance to technological change can impede otherwise well-performing AI initiatives. Credit Insurers that foster a culture of innovation and continuous learning will be better positioned to take full advantage of AI's potential.
Opportunities of AI
AI presents a wealth of opportunities for credit insurers willing to embrace it. One of the most immediate benefits is the ability to improve risk assessments through predictive analytics. AI can analyse vast datasets, including economic indicators, and potentially even social media sentiment to predict which companies are most likely to default on their payments.
Another opportunity lies in automating claims processing. Traditionally, processing a claim can be time-consuming and resource-intensive, often requiring significant documentation and manual verification. AI can automate much of this process, verifying claims data against third-party sources and even detecting fraudulent claims through pattern recognition algorithms. This can reduce costs for insurers, speed up payouts for customers, and improve overall operational efficiency.
AI also offers new ways of engaging with customers. For instance, AI-driven chatbots can provide policyholders with instant answers to their queries and assist in the claims process. By automating routine customer service tasks, insurers can free up employees to focus on more complex and high-value interactions.
Challenges for AI
While AI brings significant opportunities, it also presents notable challenges that insurers will need to address. One challenge is adhering to regulatory requirements. AI systems handling personal or financial data must comply with data protection laws and upcoming AI regulations like the EU’s AI Act. This act mandates a risk assessment for AI systems, risk management tailored to each use case, transparency about AI usage, and stringent data governance practices. Insurers must ensure their AI systems fully comply with these regulations and have strong data governance frameworks.
The threat of cyberattacks also remains. As with any digitalisation, credit insurers must keep investing in cybersecurity measures to protect their systems from malicious actors. This will require ongoing vigilance, as cybercriminals are continually evolving their tactics, some also enhanced by AI.
We must also be weary of the AI delusion. As some rush to implement GenAI into business processes, often driven by fear of missing out on opportunities, we forget that it is often not best suited to solve every conceivable issue. Other tested technologies still remain relevant, and in many cases a sound combination of different tools is significantly more performant than any single technology used in isolation. Finally, there is the challenge of customer trust and understanding. As AI takes on a greater role in decisionmaking, some customers may feel uneasy about the perceived lack of human oversight. Credit Insurers will need to maintain transparency about how their AI systems work and offer customers clear explanations of how decisions are made. Building trust will be essential to ensure that AI-driven processes are accepted by the market.
Conclusion
The future of credit insurance is undoubtedly intertwined with AI. Given all the prerequisites and preparations for AI usage throughout the credit insurance organisation, it is not a completely straightforward process. We have not described the full potential for AI in credit insurance and we are unlikely to be able to already predict the full impact that AI will have on the industry. However, it is clear that it bears great potential that is ready to be leveraged by credit insurers around the world.
The power of recognition of female talent in the Credit Insurance industry
Article by Raluca Ezaru, External Relations & Information Officer, ICISA
In an industry often characterized by complex financial strategies and risk mitigation, the human element—the talent driving success—can sometimes be overlooked. However, recognition of talent, particularly among women, is not just a celebratory gesture. It is a transformative act, one that brings confidence, inspires leadership, and encourages growth. This year, for the first time, the Women in Credit Insurance (WICI) Awards will celebrate the achievements and contributions of women in the UK trade credit insurance sector, while also drawing attention to the importance of recognition and support in career progression. To be noted that WICI is currently only focused on UK.
Launched in early 2023, Women in Credit Insurance has a clear mission: to boost the representation of women in leadership roles in the UK trade credit insurance sector. Through events, training, and networking initiatives, WICI has already took significant steps. Now, the organization is taking the next step forward with the inaugural Women in Credit Insurance Awards—a moment to acknowledge not only the achievements of exceptional women but also the importance of recognition itself. Set to take place on the 21 November 2024, in London, the WICI Awards will offer a platform for celebrating female talent in an industry where leadership roles are still predominantly held by men. Guest speaker at this event will be Hannah Gurga, Director General of the Association of British Insurers, who is a strong advocate for gender diversity and inclusion. Hannah will highlight the critical role recognition plays in fostering confidence and inspiring career growth for women.
The WICI Awards come at a time when the need to close the confidence gap between men and women in
professional settings is more critical than ever. Studies have shown that women often experience a lower sense of self-confidence in their careers compared to their male counterparts, despite equal or superior qualifications. This disparity, commonly referred to as the "confidence gap", can limit women’s career advancement, even when they are equally or more competent.
Events like the WICI Awards seek to address this issue. Recognition plays a great role in boosting confidence, allowing women to see their efforts publicly acknowledged and appreciated. When talent is recognized, it provides validation, creates a sense of belonging and helps build the confidence needed to take on leadership roles. More importantly, it sends a message to others in the industry— women are not only capable but can be excelling, leading, and innovating in their fields.
Confidence, however, doesn’t grow in isolation. The presence of visible role models—women who have overcome challenges and excelled—creates a pathway for others to follow. The WICI Awards, by celebrating trailblazing women, serve as a platform to elevate role models within the credit insurance sector. Whether it’s through recognizing senior leaders or rising stars, these awards make a powerful statement: “You belong here. You can succeed here”. Yet, the importance of these awards stays beyond the individuals receiving them. They aim for a change, a way to address long-standing barriers faced by women in the industry. Gender bias, limited access to mentorship, and work-life balance challenges are hurdles many women encounter. Recognition through awards helps to break down these barriers, creating effects that go beyond the award recipients.
There is also a call to action for the industry as a whole. Leaders and managers play a pivotal role in shaping the professional journeys of their teams. By actively mentoring and sponsoring women, they not only support individual career growth but also contribute to creating a more diverse leadership landscape. Recognition should not be limited to formal awards but should be a part of everyday culture within organizations. Acknowledging and celebrating the achievements of women can drive both individual success and collective progress, paving the way for future leaders.
The Women in Credit Insurance Awards is more than just a ceremony—it is a step toward a future where talent is recognized, supported, and given the opportunity to flourish. As this event becomes a regular fixture in the industry calendar, it will continue to champion the message that recognition is not a luxury; it’s a necessity for building a stronger, more diverse, and confident industry.
As we celebrate the women leading the charge today, we also look forward to the many women whose success stories will follow, inspired by the confidence and recognition this event brings to light. However, recognition shouldn’t be limited to formal awards. It needs to become a regular part of the industry’s culture. By consistently acknowledging and celebrating the achievements of women, organizations can
help drive both individual and collective success. Recognition encourages more women to take on challenges, seize opportunities, and aspire to leadership roles—helping to shape a more diverse and dynamic industry.
The WICI Awards will also highlight the role of industry leaders in supporting female talent. Encouraging mentorship and sponsorship from senior leaders, particularly managers, is crucial in developing the next generation of women leaders. The Awards provide an opportunity for the entire industry to come together in support of women’s advancement, sending a powerful message about the importance of gender diversity in leadership.
As we look ahead to the inaugural Women in Credit Insurance Awards, it’s clear that this event is more than just a celebration of talent—it’s a turning point for the industry. By recognizing the contributions of women and championing their success, we are helping to create a more confident, diverse, and inclusive future for credit insurance. We invite all members of the credit insurance community to be part of the movement towards greater representation and recognition of women in leadership roles. The Women in Credit Insurance Awards is not only an opportunity to honor exceptional talent, but also a call to action for everyone in the industry to foster a culture of support and empowerment.
RenaissanceRe joins ICISA
A
conversation with
Patricia Mills, SVP, Head of Credit, Bond
and Political Risk
About RenaissanceRe
Over RenaissanceRe’s 30-year history, the company has evolved from a property catastrophe reinsurer to a multiline, global reinsurer with access to premier casualty, specialty, credit, and property risks. Last year, RenaissanceRe acquired Validus Re, uniting two highly skilled underwriting teams and enhancing its scale and offerings. The credit business is a significant contributor to the company’s success and diversification. Building on more than 20 years of experience, RenaissanceRe's innovative, cross-class global underwriting team provides deep expertise and flexible capital structuring.
Please highlight some key facts about RenaissanceRe
Our underwriting book is made up of approximately 60% Casualty & Specialty and 40% Property gross premiums written. Credit makes up about 10% of our overall portfolio. With the addition of Validus, RenaissanceRe writes about $12B in gross premiums written.
RenaissanceRe’s Credit portfolio consists of 3 pillars: Credit, Bond and Political Risk (CBPR), Mortgage, and Structured Credit written across 5 balance sheets and supported by a team of 24 people globally.
What was the motivation to join ICISA?
Joining ICISA is an important step for us given our growing footprint in the global surety and credit industries and the role in which ICISA and its members play in these markets. We value the engagement with other members and look forward to contributing to conversations on key themes impacting the marketplace.
What are your short-term and long-term goals as a member of ICISA, and how do you hope to contribute to the association's initiatives?
Our goal is to increase our visibility within the marketplace, strengthen relationships and increase dialogue with
stakeholders including clients and peers. We hope to provide greater thought leadership and contribute to initiatives integral to the interests of the credit and surety industries.
In your view, what are the current challenges and opportunities within the credit insurance and surety sectors, and how do you hope to address them as an ICISA member?
Currently, we feel one of the main challenges is access to consistent and transparent data in certain credit classes. There are parts of the market where data is more readily available but there is a real opportunity to help drive forward initiatives for better product and industry insights.
How do you see collaboration within ICISA helping both new and existing members to navigate an evolving global market?
Every market has a unique perspective with different motivations, pressures, and insights. Through member contribution and collaboration, ICISA helps address pressing issues within the marketplace. Ultimately, we all aim to support our clients, and increase our relevance, in the everchanging global economy. In our limited time as a member to date, we have seen such collaboration lead to a coordinated response to regulatory framework implications and steps towards a more informed discussion on data.
How do you plan to engage with ICISA’s events, working groups, or initiatives? Are there any specific areas where you would like to contribute?
Our intention is to engage across our Credit team in events such as bi-annual technical committees and virtual seminars. We aim to understand the challenges and opportunities that other stakeholders within the market are facing and add value to the conversation.
What do you hope to gain from networking and collaboration with other ICISA members?
Perspective and insight. Membership covers insurers, bank captives and reinsurers across the globe who, whilst united broadly in product commonality, all will have their own viewpoints, experiences, platforms and portfolios from which they will contribute.
How can the current ICISA members benefit from the membership of RenaissanceRe?
We have invested heavily in the development of our team, including new Credit Analytics and Risk Advisory functions, which augment how we think about the markets and risk. Our Credit portfolio extends across various lines of business, including Structured Credit, Mortgage and Credit, Bond and Political Risk (CBPR). The diversification of credit risk helps inform our perspective and provides insight into newer markets and developments.
ICISA and FEBIS join forces
An interview with Silvia Amaral da Fonseca, Secretary General of FEBIS
About FEBIS
The Federation of Business Information Services (FEBIS) is the specialized and recognized industry body representing global B2B Business Intelligence service providers managing Trade Risks. FEBIS offers its members a platform for networking and community engagement, works to align regulatory issues with credit reporting and financial systems, provides industry insights, and fosters external networking. Its mission is to promote and represent the Business Information Industry while supporting the needs and interests of business information providers and associated service providers.
As the world of business information and trade credit insurance faces an increasingly complex regulatory environment, FEBIS (Federation of Business Information Services) partnered with ICISA through a new Memorandum of Understanding (MoU). In an interview, Silvia Amaral da Fonseca, FEBIS Secretary General, explains what motivated this partnership and shares her vision for its impact on the industries they serve.
A partnership driven by shared challenges
The partnership between FEBIS and ICISA was driven by a shared belief that “by combining our respective strengths, resources, and expertise, we can make a more significant impact in addressing the challenges associated with the evolving regulatory landscape.” She notes the interdependent relationship between the two organizations: “There is a clear interdependency between FEBIS and ICISA members across several aspects. Trade Credit Insurance relies on quality business information provided by FEBIS members, as getting access to the most relevant and complete information often determines the difference between good and bad performance and the level of risk covered.”
Both FEBIS and ICISA’s members face regulatory challenges, limitations, and potential disruptions in data access. “By joining forces, we believe we can make a meaningful and lasting impact on improving access to company data in the
EU,” Silvia adds.
Enhancing insight and advocacy through collaboration
Beyond advocacy, the MoU paves the way for FEBIS and ICISA to deepen their collaboration and understanding of one another’s industries. Silvia shares, “Partnering with ICISA will enable FEBIS to better understand and serve the needs of the trade credit and surety industries, one of our main business partners.” She emphasizes that the collaboration grants both organizations access to “a broader range of mutual industry insights and best practices, enhancing the value we offer to our respective members.”
When it comes to advocacy, Silvia sees significant strength in a united voice. “In terms of advocacy, FEBIS and ICISA’s unified voice will carry greater weight when engaging with regulators, policymakers, and stakeholders,” she explains. “This joint effort will ensure that our shared interests, such as access to data, data governance, and market integrity, are more effectively represented in a regulatory framework that enables a fair level playing field.”
Driving industry innovation and growth
When asked about the broader impact of this partnership, Silvia expresses optimism about its potential to drive innovation. “A closer dialogue will lead to new ideas, promote new technologies, enhance best practices, and inspire innovation,” she says, adding that this could eventually result in “new services and/or market approaches among and beyond both memberships.”
She highlights that both the business information and trade credit sectors will benefit from a more united approach to data and technology, as well as from “a positive influence by making our joint advocacy efforts more efficient and providing better mutual understanding and insights about our industries.”
Looking to the future: shared initiatives and long-term goals
For FEBIS, the collaboration with ICISA marks the beginning of a series of joint projects. “As FEBIS starts this exciting collaboration with ICISA, there is a clear need to align our positions with policymakers and stakeholders to address policy challenges and opportunities related to data,” says Silvia. “Joining efforts to deliver informative online sessions
for both our memberships and wider audiences is also a priority.”
Looking to the future, Silvia sees the partnership as an opportunity to deepen engagement with stakeholders. “Moving forward, it will be crucial to promote initiatives that engage policymakers and stakeholders with an educational purpose to provide better knowledge about our industries,” she notes. “We aim to help them understand our needs and the vital role we play in strengthening confidence and trust within the European economy.”
In conclusion, the FEBIS-ICISA partnership will bring substantial benefits to both memberships. “The challenges are great, but so is our determination to overcome them,” she says. “Together, we are paving the way for a stronger, more resilient future for both the business information and trade credit insurance industries.”
Role models and mentorship: There is still much to be done
Article by Magdalena Cano, Senior Reinsurance Underwriter & Head of Specialty Lines, Allianz Trade
With modest representation of women in this sector, the situation requires attention and change. This article aims at modestly shedding some light on the role of women in our sector and propose some practical suggestions to move forward. Each person has a story to tell. Each woman, depending on her socio-cultural history, age, family, academic background, profession, temperament, among other elements, has a unique story to tell. I often meet young women who still think that professional and personal family life are incompatible. They need help and guidance, especially when facing challenging situations in their personal and professional paths. To change this mindset, we need to sponsor effective actions. There is still much to be done. With technological progress, our companies are immersed in constant transformation processes. There is a great need to attract and retain talent. At the same time, the percentage of women attending our universities is increasing. In 2021/22, 52% of students in Swiss universities were women. Governments and companies have already realized the importance of integrating women talents into their organizations.
Human resources departments in some large companies have already implemented measures to develop and retain talent. One such measure is to establish a mentoring system within the company. This measure can be very effective if it focuses on helping and strengthening women in organizations who wish to advance and develop personally and professionally. However, mentors primarily represent the interests of the organization, and these may not be fully aligned with the personal interests of the individual employees. Additionally, these extra efforts are directed at those identified as talents and not at all employees.
Our young women need mentors, coaches, role models, and sponsorship to encourage them to achieve their goals, helping them overcome social and systemic obstacles that initially seem impossible to resolve. I propose two elements that deserve attention: HELP and ROLE MODELS. Our women need help to strengthen their self-esteem and gain the confidence to make it happen. Role models are women who have shown the path. It is not about creating a club of heroines; ideally, women will understand and assume their new role in society. At an institutional level, our governments, parliaments, and international organizations must continue the fight for gender equality so that obstacles disappear. Companies, for their part, must also assume their social responsibility. Human resources departments aligned with ESG strategies are proof that changes are happening in this direction.
How could mentoring work? Generally, a more experienced person or an expert would accompany and help a young person achieve her goals. This relationship is, in principle, not among “equals” but can be very effective when there is a clear alignment of interests.
How could coaching work? The coach will build up a relationship helping the coachee to improve her situation through observation, understanding, and action. The coachee’s interests always prevail. This should be a relationship between equals. There is a clear contract, and the main focus is the internal and external reality of the coachee.
How could sponsorship work? Enabling, promoting, and financially supporting activities to help achieve the objectives of the sponsored entity, person, organization, or group. The basis is to build relationships and trust, allowing active collaboration not only among the women forming part of the network but also in finding and ensuring sponsors. We should also include our men, maintaining open communication to explain what our targets are and how we intend to achieve them, also explaining what kind of help we would need from external systems (men, organizations, families, etc.). In the end, we will build a “network” immersed in the surety and credit market. Why not also relate to other similar established networks and learn from them?
The recent establishment of the Women Surety Network, sponsored by ICISA, is a great initiative in this sense. This group has the focus to strive to increase presence and professional growth of women in the surety industry through identifying areas of interest, organising in-person and virtual events, hearing from others (ROLE MODELS) and sharing success stories.
There is still much to be done. Let us do it!
ANNOUNCEMENTS
New appointments at Zurich
Guilherme Henrique
Sieiro Ramiro
Regional Head of Surety Company: Zurich
March 2024: Guilherme Henrique Sieiro Ramiro assumed the role of Regional Head of Surety for Zurich LatAm.
Guilherme is a surety manager with 7 years of experience in the surety business and 5 years of experience in the financial market environment. Guilherme graduated in Business Administration by Mackenzie SP, holds an MBA degree in Economics & Risk Management, joined Zurich in 2017 and has previously worked in credit trade insurance (Atradius Re) and investment banks (Banco Santander IB, Deutsche Bank, Ford Credit Bank) in Brazil and abroad (Germany and Bosnia & Herzegovina).
September 2024: Gabriel Prevost named Head of Surety for Zurich France
Gabriel has a solid background from Allianz Trade (4+ years) and Atradius (12+years). At Atradius, he took risk underwriting positions in both domestic (French) and international markets, including large individual authorities. Afterwards, Gabriel led commercial teams still in the credit insurance field, where he managed the broker-channel in particular.
New appointments at Coface
Benoit Ganzmann appointed Country Manager for Maghreb, Western and Central Africa. Asuka Kiya appointed Country Manager for Japan.
Sarah Chu appointed General Manager for Taiwan.
Patrice Luscan appointed Corporate Relations and Public Affairs Director.
Marion Sanchez appointed Group Marketing Director.
Gabriel Prevost Hean of Surety Company: Zurich
Benoit Ganzmann Country Manager
Asuka Kyla Country Manager
Sarah Chu General Manager
Patrice Luscan Corporate Relations and Public Affairs Director
Marion Sanchez Group Marketing Director
Tryg Garanti rebrands to Tryg Trade
Since October 7th, 2024 Tryg Garanti changed its name to Tryg Trade.
"We see our business as an enabler of trade. Having a growing non-nordic portfolio, and at the same time being on a path towards more penetration in the European SME market, changing our name will ensure a better recognition. The change is solely related to rebranding and will not affect our collaboration in any other way."
Grupo Catalana Occidente (GCO) opens new office building and gathers the employees of the companies in Madrid under one roof.
In the new office building, which is located at 31 Méndez Álvaro Street, GCO is concentrating all its employees in Madrid, who were previously spread across various locations in the city. Atradius Crédito y Caución employees are also moving from their old location on Paseo de la Castellana to the new office building. The new location is situated in a dynamically growing neighbourhood in Madrid, relatively close to Atocha train station. In line with GCO's high ESG commitments, the building impresses with the highest standards in terms of sustainability and innovation. In this context, the building has received the prestigious LEED Platinum certification, the highest level of recognition awarded by the U.S. Green Building Council (USGBC). The building offers office workplaces for 1,100 people, as well as extensive services for GCO, Occident and Atradius Crédito y Caución employees.
New appointments at Swiss Re
Savanna Davies (Senior Underwriter), Zach Weger (Underwriter) and Zach Sherman (Graduate) have joined the Swiss Re North American Credit & Surety Re team. Savanna is based in Knoxville, TN and Zach is based in Chicago, IL and Zach S. is based in New York City.
Savanna brings 10 years of contract surety experience from the primary side of the business across several geographies in the US. She moves over from Travelers, where she held positions of increasing authority and most recently served as an underwriting manager in the company’s Hartford home office. She has managed large and intricate relationships related to her contract surety portfolio of clients who varied in construction discipline, size, and complexity. Savanna maintains a network of contacts that span the US surety market. She holds a BA in Finance with a minor in Economics.
Zach Weger graduated from Iowa State University in May 2020 with a Bachelor’s degree in Finance. He has been in the surety industry with Old Republic Surety since February 2021 and currently resides in Chicago. Zach completed the underwriting training program at Old Republic and has experience in underwriting both Contract and Commercial surety business at the branch level.
Zach Sherman began his 18-month journey in the Swiss Re graduates programme on September 1st. Zachary will be focusing on treaty support and underwriting alongside team members Savanna, Basil and Zach W. Zach S. holds a BA in International Relations and Economics from Boston University.
