International structured credit insurers deliver ‘outstanding’ claims payment performance in 2018-19

International structured credit insurers deliver ‘outstanding’ claims payment performance in 2018-19 150 150 Haggie Partners

Insurers paid 100% of all valid claims made by regulated financial institutions under credit insurance policies on time and in full in 2018 and 2019, according to research commissioned by the Lloyd’s Market Association (LMA) and the International Underwriting Association (IUA).

The analysis of claims-performance data, which is conducted annually, also found that the market paid more than $3.3 billion in claims between 2007 and 2019.

Data was provided by the leading brokers* of ‘single situation’ transactional credit insurances. Only a small minority of claims – 15 in total since 2007 – were not paid in full, in each case because the insured did not comply with a policy obligation that was within their control. However, despite this, more than $53 million has been paid towards these ‘compromised’ claims. There were no new ‘compromised claims’ in 2018 or 2019.

London’s single-situation credit insurance claims performance, 2007-2017
  2007-2017 2018 2019 Total
Amount Claimed, US$ million 2,688 501 232 3,421
Amount Paid, US$ million

(excluding compromised claims)**









Claims (number) 436 50 34 520
Compromised Claims (number)*** 15 0 0 15

**of compromised claims, 44% of the amount claimed was still paid as a result of settlements.

*** For all 15 compromised claims, 100%, the dispute arose from nonfulfillment by the insured of an obligation or term under the policy which is within the Insured’s control.

David Powell, Head of Non-marine Underwriting at the LMA, said: “This research proves what we already knew: London’s claims performance is outstanding. The market’s insurers provide banks and other lenders with a reliable, flexible, and reactive form of inexpensive contingent capital which should be considered in the calculation of their required regulatory capital. A potential increase in claims as a result of the pandemic lockdown will not impair our members’ ability to pay, as I expect our investigation of this year’s claims performance will show in 2021.”

Christopher Jones​, Director of Legal and Market Services at the International Underwriting Association said: “IUA member companies play an important role in supporting financial markets with reliable and robust credit insurance cover. This claims data clearly shows that such policies respond effectively in the event of a loss, which needs to be better reflected in the assessment of regulatory capital requirements.”

The LMA and IUA have been working with the International Credit Insurance & Surety Association to support banking-sector clients that use single-situation credit/non-payment insurance. The associations have focussed particularly on proposed future changes to the Capital Requirement Regulation and the Capital Requirements Directive. Audrey Zuck of A2Z Risk Services has provided invaluable support. Performance monitoring will continue, with 2020 payment data expected to be reported in 2021.