Export credit insurers face high demand and high claims in 2025, says Berne Union Report - Trade Treasury Payments

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.” This maritime wisdom aptly describes the export credit insurance industry in early 2025. As revealed in the latest Berne Union H1 2025 report, Berne Union Business Confidence Trends Index, insurers are simultaneously adjusting their sails to capture the favourable winds of demand while bracing for the storm of anticipated claims.

The Business Confidence Index tracks perceived demand and claims in the export credit insurance industry based on half-year surveys of Berne Union members. Scores above 50 indicate expected growth, and scores below 50 indicate contraction. Its latest report highlights strong demand growth driven by a hike in global trade volumes alongside concerns about rising claims, portraying credit insurers with worried lines in 2025, especially as they thrive on uncertainty. 

Short-term demand surges amid global trade recovery

The export credit insurance market shows remarkable momentum, with the index for expected short-term demand reaching 74.5 points and is projected to grow at approximately 3% for 2025, its fastest pace since 2021.

Private insurers have reversed their previously pessimistic projections, recording their strongest positive sentiment since the survey began, with an index score of 77.3. This optimism stands in sharp contrast to their outlook for the second half of 2024.

Public providers maintain a similarly positive outlook, but with a slightly lower index score of 65.3. Many of these providers cite domestic export growth as a key driver for business expansion opportunities, alongside efforts to boost product awareness and introduce new insurance products.

Protectionism creates new opportunities

A notable trend in the report is the potential for business growth during the current wave of trade protectionism. Many insurance providers agree that supporting exporters facing new tariff barriers has significant opportunities. With looming tariffs from the current US administration and potential retaliation from major trading partners (including Canada, China, and the EU) exporters are turning to credit insurance to mitigate risks to their trade assets.

However, not all providers share this optimism. Some face challenges related to competitiveness, which effectively prices them out of new opportunities. This is particularly more severe for smaller providers attempting to expand their market share.

Longer-tenor coverage supported by defence and infrastructure

The report states that the sentiment toward longer-tenor coverage remains stable at 58.5, broadly aligned with its historical average. Public providers have a consistently positive outlook with an index score of 65.4. Private insurers have a neutral score of 50.0 points.

Current demand for longer-tenor coverage is being driven by two primary factors: a surge in defence transactions, particularly in Europe as countries increase defence spending, and growing demand for infrastructure projects in developing economies. 

Claims outlook remains concerning

Despite the positive demand indicators, the outlook for claims under short-term policies remains negative, with the index at a concerning 83.5. The expected normalisation to pre-pandemic levels is proving slower than anticipated, with larger providers harbouring particularly pessimistic views.

Geopolitical risk is the primary concern for potential short-term claims, now compounded by uncertainty over global trade tariffs. Many providers anticipate that these factors could lead to more payment delays, particularly for US buyers facing the added burden of tariff costs.

Private insurers have the deepest negative sentiment regarding claims, with an index score of 75.0. Among these insurers, Germany is the most frequently cited country for potential claims, where economic recovery remains elusive. 

The report identified the European automotive industry, grappling with weak electric vehicle demand, Chinese competition, and factory closures, as a key sector at risk along with construction and commodities.

Public providers have a somewhat less pessimistic outlook with an index score of 58.3, suggesting claims are stabilising toward the historical mean. Overall, all respondents expecting a decrease in short-term export credit claims belong to this group.

Sovereign debt risk persists in emerging markets

For longer-tenor coverage, claims expectations show relatively little change with an index of 52.3. However, sovereign debt risk is a constant concern for emerging claims, particularly in Western Africa. A strong dollar continues to pressure external financing costs in these regions, complicating the claims landscape.

Senegal stands out following a recent double-notch downgrade after a self-imposed audit of sovereign finances. Angola, where the Ministry of Finance has increased borrowing in recent years, and Mozambique were also noted as areas of concern. 

Beyond Africa, Russia, Ukraine, and Sri Lanka continue to represent ongoing risk areas.

Both public and private insurance providers expressed shared concerns about energy transition projects, such as offshore wind and green technology. Many also cite overcapacity and slower-than-expected adoption as key risks that could impact future claims in these sectors.

The sail ahead

The Berne Union Business Confidence Index for H1 2025 says that the credit insurance industry faces both opportunities and challenges. Strong demand growth, particularly in short-term coverage, reflects recovering global trade volumes, while defence transactions and infrastructure projects sustain longer-tenor business. 

However, with geopolitical tensions and economic pressures in many countries, insurers remain concerned about the potential for increased claims. Only time will tell how well they can adjust the sail.

Read the full report here.