Credit insurance: the hidden engine driving global trade

Global trade faces constant and often unpredictable challenges. It is shaped by shifting alliances, uneven growth and persistent uncertainty. In this environment, trade credit and credit insurance have become systemic enablers of international commerce.

Often viewed as technical, credit insurance helps businesses build confidence in cross-border transactions, strengthen supply chain resilience and manage financial exposure. Its strategic value is clear, especially for firms seeking international growth while maintaining financial stability.

Turning risk into opportunity 

At its core, trade credit allows suppliers to offer payment terms, effectively extending short-term financing to buyers. This informal system accounts for around 80-85% of all short-term trade finance worldwide, according to the Bank for International Settlements (BIS).

However, this trust exposes suppliers to the risk of non-payment, whether through buyer insolvency, delayed settlement or political disruption. Trade credit insurance transforms that exposure into opportunity by protecting up to 90–95% of insured receivables against default. With insurance in place, exporters can offer competitive payment terms while mitigating the risk of bad debts. Credit insurance transforms risk into opportunity.

This is especially important in cross-border trade, where legal systems differ and enforcement can be slow or costly. Credit insurance enables firms to extend trust where it might otherwise be withheld. It supports the flow of goods and services, not only between well-established partners but also into new and less predictable markets.

According to the World Bank and International Finance Corporation (IFC), firms with access to credit insurance can increase export participation by 20–30%, particularly in emerging markets where collateral is scarce. The World Trade Organization (WTO) notes that 80–90% of global merchandise trade relies on trade finance in some form. This highlights how risk-mitigation tools, including credit insurance, sustain the circulation of global trade and facilitate access to new markets. 

By mitigating the risk of non-payment, credit insurance allows businesses to focus on growth rather than worry about financial exposure. It is a strategic tool that supports both operational continuity and international expansion. For firms navigating global markets, it offers a reliable way to manage credit risk and trade with confidence.

Supporting resilience through economic cycles

Global trade is rarely smooth. Currency fluctuations, political tensions and market volatility are constant features of the international landscape. Yet despite these pressures, global trade continues to demonstrate remarkable resilience, with services playing an increasingly central role in driving growth. This resilience is not accidental.

Trade credit insurance plays a key role in keeping commerce moving when conditions shift. By absorbing the risk of non-payment, insurers help firms maintain operations even when conditions shift. Coverage is adjusted to reflect new realities, whether that means a downturn in a key market, a supply chain disruption or a change in buyer behaviour. This adaptability is essential.

Recent years have seen sharp swings in trade volumes. During such fluctuations, insured trade receivables act as shock absorbers. The Bank for International Settlements (BIS) notes that credit insurance supported liquidity and export continuity when bank lending contracted. 

This countercyclical function is increasingly recognised by regulators. The European Banking Authority (EBA) classifies credit insurance as an eligible credit-risk mitigant under EU prudential frameworks. Under updated Basel III and CRR3 rules, banks can reduce capital charges when exposures are insured by rated counterparties, though new risk-weight floors limit the extent of capital optimisation. This regulatory recognition strengthens the link between private insurance and systemic financial stability.

For businesses, flexibility in risk management allows for confident planning, investment and growth. Rather than being paralysed by uncertainty, firms can move forward with confidence, knowing their receivables are protected. In volatile times, credit insurance becomes more than a safeguard. It becomes a strategic enabler of continuity and resilience.

Enabling inclusion and market expansion

Emerging markets offer significant growth potential, but they also present higher levels of risk. Firms expanding into unfamiliar territories often face limited transparency, weaker legal protections and unpredictable payment behaviour. According to the OECD and WTO, default probabilities in these markets can be up to three times higher than in advanced economies.

Trade credit insurance helps bridge that gap. It transforms uncertain receivables into bankable assets, enabling firms to trade with confidence in markets that might otherwise be out of reach. The International Credit Insurance & Surety Association (ICISA) reports that global insurers collectively protect more than USD 3.5 trillion in receivables annually, equal to roughly 13% of world merchandise exports. 

For small and medium-sized enterprises (SMEs), this support can be transformative. Credit insurance can shorten Days-Sales-Outstanding (DSO) by 10–15%, freeing liquidity for reinvestment and growth. It also opens access to markets that might otherwise be out of reach, levelling the playing field and encouraging broader participation in global trade. 

Beyond financial protection, credit insurers offer risk intelligence—data on buyer reliability, sectoral exposure and country performance. Atradius, for example, provides insights into payment trends and buyer behaviour, helping businesses make informed decisions about where to trade and with whom. When issues arise, collections services step in to resolve disputes and recover debts, preserving commercial relationships. 

This combination of protection and intelligence supports responsible expansion. It helps firms meet internal governance standards and comply with external regulatory requirements. By providing documented risk assessments and structured coverage, credit insurance enables sustainable growth aligned with international norms.

Unlocking global trade with confidence 

By enhancing liquidity, enabling international expansion and strengthening credit risk management, trade credit insurance contributes directly to business performance. It works quietly in the background, supporting growth across borders and helping firms navigate complexity with confidence. 

This strategic role is increasingly recognised. The International Chamber of Commerce (ICC) finds that more than 60% of large corporates now embed credit insurance into enterprise-wide risk frameworks, aligning it with digitalisation, analytics and sustainability strategies. This integration reflects a shift in perception: credit insurance is no longer merely a contingency tool, but a strategic asset that sustains trade continuity and enables firms to pursue growth with confidence. 

Credit insurance complements digital transformation by supporting data-driven decision-making. It stabilises liquidity, enabling firms to invest and expand even in volatile conditions. It also supports supply chain transformation, providing financial resilience during periods of disruption or change.

For businesses entering new markets or seeking to reinforce their financial position, trade credit insurance offers more than protection. It unlocks opportunity. By converting receivables into bankable assets, it improves access to finance and strengthens relationships with lenders. According to OECD credit insurance is a critical financial instrument supporting liquidity and trade continuity, having macroeconomic relevance, especially during systemic shocks, while BIS recognises trade credit insurance as a shock absorber during liquidity crunches, supporting export continuity and working capital stability when bank lending contracts.

In a world where uncertainty is a constant, credit insurance serves as a stabilising force. It helps firms navigate complex risks—from trade disruptions to shifting geopolitical landscapes. More than a safeguard, it provides something essential: the confidence to grow.

To explore how these insights can strengthen your own credit risk strategy, get in touch with us to see how we can help you stay ahead.