Credit insurance presents Singapore with “scope for growth,” as more SMEs become familiar with the coverage, according to an industry expert.
The current market for the credit insurance cover in Singapore is focused on bigger risks, according to Mark Hoppe, managing director of the Australian branch of global insurer Atradius, told Insurance Business but the Singapore market presents growth opportunities.
“I think in Australia, we see more of what we call whole turnover propositions where people tend to insure their whole book and they treat it as a normal insurance product, whereas in Asia it is still driven a fair bit by the banks and around securitisation and about insuring specific risks,” Hoppe said.
“The market in Singapore would be bigger than Australia but there is not much whole turnover cover. I think you get chunkier risks. You don’t get a business wanting to insure their whole company, they just want to take out one large risk for one transaction.
“Whilst I say in Singapore that is the risk that people are looking at at the moment, what that means is there is a lot of scope to increase the knowledge of credit insurance in those markets.
“Somewhere like Singapore does have a lot of scope for growth in that SME area and those normal day-to-day businesses rather than those big, chunky transactions.”
As the Monetary Authority of Singapore recently outlined three factors to watch for Singaporean businesses, Hoppe said that brokers should approach businesses from a wide range of sectors about the coverage.
“I think the key, when they [brokers] do approach, is not just to take a short-term view because that sales pitch only works for one year or two years while the economy is poorer,” Hoppe said.
“I think that may be something that gets people through the door and get’s their interest but once they are there they need to be looking at the other benefits of being able to grow their business with the protection of credit insurance, about the extra comfort that you have so I mean, as the economy improves in the coming years.
“People will want to grow their businesses again and they will need to have that knowledge and comfort. I guess in short, it is about using the current concerns as that initial contact point but making sure the client understands the underlying benefits of it as something you think of as a long term product as well.”
Lack of mid-market ‘readiness’ presents broker opportunity
Risk index finds claim activity increase by 62%