The ITFA (International Trade and Forfaiting Association) recently released a new initiative in the form of a Basel III-compliant trade credit insurance policy form.
Designed to assist insurers and financial institutions to negotiate new deals and help establish a standardized Basel III policy, the IFTA’s initiative also represents an effort to help trade credit insurers in an era where insurance companies are seriously re-evaluating how they operate.
Trade credit insurers, and the insurance industry as a whole, have been greatly challenged by the economic fallout created by the pandemic and the lockdowns.
The frequency of insolvencies from commercial customers due to financial difficulty has risen greatly. Normally, credit insurers would cancel (or at least limit) coverage for buyers who display signs of being unable to pay.
But due to the serious economic situation created by the pandemic, there is now the dramatically increased risk of trade credit being withdrawn across the board.
