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Reinsurance
Credit and Political Risk insurance
market flourishes in Asia
These are tumultuous yet promising The past year has proved to be bus- Credit risks a “new normal†of
times for the Asia-Pacific Credit ier on the claims side than during APAC trade
and Political Risk Insurance (CPRI) the height of the Global Financial According to the International Cham-
market. Rising risks of non-payment Crisis, with economic uncertainty ber of Commerce (ICC), APAC is the
and political risk have created more (especially in China), insolvencies, and largest region for SWIFT import and ex-
product demand in APAC. The CPRI falling commodity prices all increasing port traffic (72% and 76%, respectively),
market has responded well so far, the likelihood of non-payment At the with average values of over US$400,000.
shares Mr Harry McIndoe, Assistant same time, political risk – including
Director at BPL Global, Singapore. that associated with terrorism, armed As APAC continues to broaden and
conflicts and increasingly powerful an- deepen its international trade rela-
ti-establishment political movements tionships, credit risk is naturally a
– is only growing, affecting investors in, concern. Companies across the region
and lenders to, businesses and projects are entering new markets – followed
across the region. by their banks – and extending their
supply chains across multiple regions,
Despite this, the CPRI market in all of which further increases the need
APAC – offering both non-payment to protect themselves from the risk of
insurance for banks and corporates non-payment by new counterparties.
as well as more traditional political
risk insurance – has proven resilient, The last few years have been a tough
paying claims on time, and in full. At claims environment for insurers in
the same time, BPL Global has seen APAC. Non-payments in China and
rising demand for the CPRI product. India have been rife, while BPL Global
In order to continue to cope with the has witnessed several high-profile
rapidly changing credit and political insolvencies in Singapore – including
risk environment and offer protection the Dynamic Oil Trading Company, and
to clients while remaining profitable most recently oilfield services provider
and sustainable, the market must adapt Swiber Holdings. What is more, some
and innovate. debtors have struggled to repay USD
obligations when all revenue is in local
currency.
48 EAIC Special Issue Asia Insurance Review October 2016 Back to Contents
