Soft pricing is masking rising credit risk, warns Allianz Trade’s Murrow

Competitive trade credit insurance pricing is creating a false sense of security at a time when global economic conditions and corporate credit risks are deteriorating, according to Allianz Trade Americas president and CEO Sarah Murrow.

Murrow (pictured) cited data from the International Credit Insurance and Surety Association.

Data showed global trade credit insurance premiums contracted by 0.4% between 2024 and 2025, despite the value of insured exposures increasing by 2.8%.

The same divergence was evident a year earlier, when insured exposure grew by 7.5% while written premium declined by 0.6%.

“While capital is remaining abundant, risk is increasing,” Murrow told GR.

“The disconnect could very well be because financial capital remains abundant while the underlying trade risk is fundamentally changing and becoming more complex,” she added.

Strong insurer balance sheets, healthy investment returns and continued competition for market share are helping to maintain the soft conditions, she observed.

However, Allianz Trade expects global insolvencies to increase by a further 6% by year-end 2026, after another 6% rise in 2025.

“We are seeing slower global growth,” Murrow said. “We’ve recently revised down our forecasts for global GDP and trade growth, and we are expecting to see a higher-for-longer interest rate environment, given the inflationary pressures.

“That will create pressure, especially on leveraged companies and, more specifically, SMEs, which tend to suffer the most in these types of higher-for-longer interest rate environments.”

Geopolitical disruption, tariffs, sanctions and export controls were also contributing to a prolonged reconfiguration of international supply chains.

Disruption to energy supplies through the Strait of Hormuz illustrated how geopolitical events could feed into corporate credit conditions, Murrow said.

“The cost of oil is not just felt at the pump when consumers are filling up their cars,” she said. “The cost of energy affects businesses in manufacturing and the transportation of goods, so it is really a driver of inflation.”

Beyond indemnification

Murrow said the competitive pricing environment should not be interpreted by chief financial officers as evidence that the underlying exposure had improved.

“Because pricing remains relatively competitive in the trade credit insurance space, it should not mean that the risk is not present or worsening,” she said.

Allianz Trade, the Americas arm of which encompasses the US, Canada and Brazil, is increasingly being asked to provide clients with information and predictive intelligence alongside traditional indemnity protection, Murrow noted.

“Historically, trade credit insurance has really been viewed as an indemnity product,” Murrow said.

“But now, more than ever, our clients need our information and insights to manage their credit risk. This is not only the credit risk they have in their customer base, but also the credit risk they are experiencing in their supply chain,” she said.

Car manufacturers, construction companies and other businesses with large and complex supplier networks were increasingly seeking help to identify and monitor potential weaknesses.

Murrow cited a personal example of a message she had received from the manufacturer of her car after a supplier supporting a lidar safety system in the car became insolvent and entered liquidation.

“This is a prime example of how supply chain credit risk can affect the delivery of a product and also the consumer experience going forward,” she said.

A strategic business tool

Trade credit insurance could can help companies pursue growth by entering new countries or industries and offering credit terms to unfamiliar customers, Murrow suggested.

For businesses with hundreds or thousands of customers, it could provide a cost-effective way to outsource credit monitoring, while insured receivables may also support more advantageous lending conditions from financial institutions.

“It is a strategic business tool because it allows businesses to address a number of needs,” she said.

“We see that even when a client comes to us because it has experienced a large insolvency, once it buys for that specific reason, it starts realising the other benefits. Its reason for continuing to buy evolves and expands into those other areas.

“The challenge for us as an insurer isn’t simply pricing the risk any more; it is about helping our customers navigate uncertainty.

“The continuous monitoring and early warning signals we can give our customers are becoming increasingly valued over just the price for the exposure that we write,” she added.