SINGAPORE, Feb. 7, 2012 /PRNewswire-Asia-AsiaNet/ —
Recent Downgrades in Eurozone Increases Non-Payment Risk for Suppliers; Companies Seeking Greater Protection from Buyer Default
Asian suppliers are becoming increasingly worried about the creditworthiness of their trading partners’ in Europe and the US, sparking increased interest in using trade credit insurance to protect their trade receivables.
Marsh, a global leader in insurance broking and risk management, has seen a significant rise in requests for trade credit insurance quotes over past the three months compared to the same period last year, with interest up 30% and 20% in Singapore and Hong Kong respectively.
To help clients in Asia, Marsh has developed a regional trade credit insurance facility with a leading trade credit insurer specifically for small-to-medium sized enterprises. These are the companies most at risk for cash flow issues resulting from buyer default owing to reduced balance sheet strength and less ability to withstand financial shocks.
“Economic worries, particularly in Europe, are causing Asian suppliers to reassess the ability of their customers to pay,” said Richard Green, Head of Marsh’s Trade Credit and Political Risk Practice in Asia. “In response, companies are increasingly looking at trade credit insurance to protect cash flow.
“Given the environment, the trade credit insurance is market tightening with rates increasing in response to the poor macro-economic conditions in the Europe and the US. Our trade credit facility is one way we’re helping clients in Asia protect their revenue streams.”
With Asia being the engine for much of the world’s manufacturing output, the ability for its trading partners to pay — and the payment terms on which they transact — are critical for companies in the region. Trade credit insurance helps companies manage the risk of customers’ insolvency or payment default. It enables companies to trade on non-secure payment terms for account receivables, making them a more attractive trading partner for buyers.
From a buyer’s perspective, it is better to transact with a supplier on an open account basis rather than have to provide a letter of credit or a bank guarantee. Trade credit insurance allows suppliers to offer unsecured payment terms without taking on increased risk.
Marsh ( http://usa.marsh.com/ ), a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 25,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies ( http://www.mmc.com/ ) (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding US$10 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter ( http://www.guycarp.com/ ), a global leader in providing risk and reinsurance intermediary services; Mercer ( http://www.mercer.com/home ), a global leader in human resource consulting and related services; and Oliver Wyman ( http://www.oliverwyman.com/index.html ), a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc ( http://twitter.com/@Marsh_Inc ).