A curious divergence has opened up in the trade credit insurance market this year: the cost of cover is falling, just as the risk it protects against is rising.
Trade credit insurance has become cheaper, even as the amount of trade exposure being insured has continued to grow. At the same time, business insolvencies are still expected to rise.
That combination deserves a closer look.
According to ICISA data reported in Global Reinsurance's coverage of this year's Monte Carlo Rendez-Vous, global trade credit insurance premiums contracted by 0.4% between 2024 and 2025, while insured exposure increased by 2.8%. The year before, the divergence was even more pronounced: insured exposure increased by 7.5%, while written premium declined by 0.6%.
In other words, more risk was being covered for less premium.
That does not automatically mean that the insurance market is mispricing risk. Pricing depends on competition, capacity, claims experience and the composition of the business being written.
But it does raise an important question: are improving insurance conditions being mistaken for improving underlying conditions?
The risk behind the invoice
Trade credit insurance is often invisible until something goes wrong.
Its basic purpose is straightforward: a company sells goods or services on credit and faces the possibility that its customer will not pay. The insurer protects against qualifying non-payment, while also providing information that can help companies decide who they should sell to and on what terms.
That makes trade credit insurance an unusually useful window into the real economy.
A company's ability to pay is ultimately connected to everything happening around it: demand, financing costs, energy prices, tariffs, transport costs, suppliers, customers and geopolitical developments.
And those pressures are becoming increasingly difficult to separate.
Financial capital remains abundant across the insurance and reinsurance markets, even as the underlying trade risk is changing fundamentally — reshaped by geopolitical disruption, tariffs, sanctions and export controls, all contributing to a prolonged reconfiguration of international supply chains.
That distinction matters.
Abundant capital is not the same thing as a healthier trading environment.
The pressure does not always appear where we first expect it
A disruption to global trade does not necessarily begin with a company becoming insolvent.
It can begin much earlier.
Energy becomes more expensive. A shipping route becomes less reliable. A customer needs longer payment terms. Inventory stays in transit for longer. Working capital requirements increase. A manufacturer absorbs higher costs while demand weakens.
Each individual problem may look manageable.
Together, they can change the financial position of a company quite quickly.
This is particularly relevant for businesses operating with thin margins or high financing requirements. One of the sector's largest insurers, Allianz Trade, currently forecasts a 6% rise in global business insolvencies in 2026, following a 6% increase in 2025 — pointing in particular to the effects of the Middle East conflict on energy markets, shipping costs, supply chains, inflation and financing conditions.
The important point for us is not any single forecast.
It is the mechanism behind it.
Trade disruption eventually becomes credit risk.
A cheaper policy does not necessarily mean a safer customer
This is where the divergence in the market becomes particularly interesting.
If insurance capacity is plentiful and claims remain relatively contained, insurers can compete more aggressively for business. That can push prices lower.
For the buyer of insurance, this is obviously welcome.
But it can also create a misleading signal.
A company may find that protecting its receivables has become cheaper at precisely the moment when its customers, suppliers and markets are becoming more difficult to assess.
That is why we think the more useful question is not simply whether trade credit insurance is becoming cheaper.
It is whether the risk being transferred is becoming cheaper — or whether the market is simply becoming more competitive.
Those are two very different things.
The supply chain is part of the credit risk
One of the more important changes in international trade over recent years has been the realisation that supply-chain disruption cannot always be treated as an operational problem sitting somewhere outside the financial system.
It eventually reaches the balance sheet.
A manufacturer that cannot obtain a critical component may lose production. A distributor facing higher freight costs may need additional financing. A company selling into a market affected by tariffs may suddenly find that previously profitable contracts no longer work in the same way.
And the same company may simultaneously be exposed to weaker customers further down the chain.
This is why trade credit risk increasingly needs to be understood beyond the individual buyer.
The question is not only: "Will this customer pay?"
It is also: "What is happening to the network that determines whether this customer can pay?"
That is a much more difficult question.
Insurance is becoming more than indemnification
There is a second shift worth noting.
Across the trade credit insurance industry, the product is increasingly described as providing predictive intelligence alongside traditional indemnity. That reflects a broader evolution: continuous monitoring of customers and their credit conditions becomes part of the value proposition, rather than simply compensation after a loss.
That makes sense in the current environment.
If risks are changing faster, waiting for a missed payment before acting is not particularly useful.
The more valuable information may be the signal that appears beforehand: a deteriorating customer, a weakening sector, a change in payment behaviour, increasing exposure to a troubled market or a supply chain becoming more vulnerable.
In that sense, trade credit insurance is gradually moving closer to risk intelligence.
And that may ultimately prove more important than the insurance premium itself.
What we think the market is telling us
The most interesting conclusion from this year's data is therefore not that trade credit insurance is cheap.
It is that price and risk appear to be sending different signals.
Insurance pricing is being influenced by abundant capital and competition. At the same time, the underlying environment for companies remains exposed to geopolitical disruption, supply-chain changes, higher financing costs and rising insolvency levels.
Those two things can coexist.
For businesses involved in international trade, this means that cheaper protection should not automatically be interpreted as evidence that the underlying risk has disappeared.
It may simply mean that the market currently has plenty of capacity to absorb it.
And that distinction becomes particularly important when the risk is moving through an increasingly interconnected system.
A shipping disruption can become a cost problem.
A cost problem can become a liquidity problem.
A liquidity problem can become a credit problem.
And a credit problem can eventually become an insurance claim.
The invoice may be where the risk becomes visible. It is rarely where the risk begins.
That, in our view, is the more interesting story behind this year's numbers.
For anyone watching global trade, the trade credit market offers a useful signal: the price of protection may be softening, while the economic conditions behind the exposure remain anything but simple.