Q&A: Steve Bramall, Allianz Trade

What’s your read of the trade credit risk environment in 2025?

Risk is definitely back. The numbers of insolvencies are super high, the economics are tough, there’s been a lot of talk over the last few weeks that we’re looking down the barrel of stagflation risk again, so low growth and constant inflation.

Then there is geopolitics, which I think probably more than ever is front and centre. A huge proportion of the world’s GDP went through an election in 2024, so there’s loads of different headwinds out there, loads of new policies and lots different and difficult things for companies to navigate.

We provide the sleep-at-night factor. Over the past 18 months, we’ve increased our product suite because we’ve seen an increased need to manage different types of risk.

Clients pretty much all tell me they’re looking at interest rates, inflation, the cost of employment and how that’s changed recently, and – one thing that’s come out more recently, but has always kind of been there – risk in the supply chain. Companies are realising that it can be as costly and disruptive to lose a supplier as it is to lose a buyer. Supply chain management has become really critical.

We’ve been through a benign period of lower insolvencies, and lots of state support measures through Covid. That’s now all finished, and we’re back to what you might call ‘business as usual’, but the risks are higher than business as usual.

Across the whole piece, credit risk has definitely increased. But our products and services are for situations like this. We provide the sleep-at-night factor. Over the past 18 months, we’ve increased our product suite because we’ve seen an increased need to manage different types of risk. We’ve got a stronger product offering now than we’ve ever had at Allianz Trade.

What’s been added to your product suite?

We’ve added a fraud product. 

We’ve also just launched a new information product, called Grade Check. For years, we as a business have always rated companies and we have our own methodologies to do that. Clients really like that side of our business, and we’ve always previously backed it with insurance: if we put a rating on something, we’ll back it with our own money. But over time, with this supply chain factor, companies are wanting to be able to improve their supply chain risk intelligence, but don’t necessarily need a full insurance policy yet. There’s been loads of demand for companies wanting to check upstream, rather than just downstream, and now we have a product that can do that.

We have about 25 analysts dedicated to the UK market who are constantly rating companies. Now, if you want to check your supply chain, you can buy the Grade Check product, and you can go through and spot where your potential risks might be. We’re seeing finance directors and procurement departments adding this into their procurement processes.

What does the change of administration in the US portend for UK businesses?

It’s a massive level change, but for the trade credit insurance space, I like to think that we’ve actually been here before. We’ve seen a Donald Trump administration before, so we do have some history and some idea of what we think might happen. There could be a lot of protectionist measures – like tariffs – put in place. But we’ve been in similar territory before, and we’ll be here to provide trade credit support wherever the chips may fall.

The UK generally, economically, has an interesting balance, because we have a relationship with the US, the EU, and with China, and politically, we’ve got to try and manage all of those stakeholders and that’s really difficult.

For companies in the UK, the US is a big export partner – our economic research shows it’s our second biggest export market – and obviously there’s the risk to businesses of lost sales or pricing pressures depending on what measures are enforced.

One of the benefits of trade credit insurance is if you do end up having to find new partners to trade with, you can use your trade credit insurance policy to help you do that. While you might not have a relationship with a new company or a new sale route to a different market, we might have known them for 10 or 20 years. 

It’s one thing that our product doesn’t get so much press around: we talk a lot about covering failure, but it’s actually a sales-enabling mechanism as well. You can use our grades and the coverage that we provide to say, “I don’t know this company, but my insurer is saying that they do know them, so I can happily go to £500k, £1m, to whatever it is, with confidence.”

We’ve been here before with America, there will be some changes. But for us, this is a real opportunity to help our clients find different ways to do things and advise them.

What does Allianz Trade expect to see in terms of UK insolvencies in 2025?

It was a super active year in 2024 in terms of insolvencies in the UK, and I think that that will continue into 2025. UK business insolvencies hit a 10-year peak in 2023, which only began to fall slightly in 2024, and as I’ve said, there’s lots of new headwinds.

We’re forecasting that insolvency numbers will fall a little bit more – by 3% year-on-year in 2025 and 7% in 2026. The other thing I would mention is, and the thing that we’ve seen more than the insolvency numbers, is what we call severity losses are back. Bigger companies are failing quicker, which then adds a load of pressures to the supply chain. I don’t think that will change. 

Over the last 12 months, more large companies have been getting into difficulties than we’ve seen for quite a while, so it’s more important than ever for businesses to understand exactly who they’re trading with, and that’s upstream and downstream.

How do those severity losses figure in the trade credit claims environment?

At the end of 2024, there were definitely some larger losses that the industry hadn’t seen there before. But overall, claims are back to, if not slightly ahead of, the pre-Covid period. Covid was a real slump, and then the run out of the Covid years was low for the entire industry.

But I’ll be honest with you, for me, that’s really good for the industry, because it’s our value add, it’s what we offer. If claims remained really low, you’d then start to question the value of the product, but actually now we get to show our value. As a credit risk professional, I keep telling my team low claim environments are boring. This is when you earn your money, when things are moving a lot faster.

While claims levels have gone up, our loss performance is still good. We’re still around where we expect to be, so there’s no panic around the business side of it. But we do see a lot more activity and I can’t see that going away.

How have buying behaviours for trade credit coverage changed?

There’s a really strong appetite in the market to buy the product. When you see these uncertain times, it should generally lead to more people entering or exploring the market. Despite claims going up, prices remain really attractive and have not dramatically changed, despite the environment changing. Structures are a lot more flexible than they were pre-Covid – insurers have got really good at making policies more bespoke to meet their clients’ needs, and coverage is generally available across all sectors.

What I would say is companies are probably looking at whole portfolio a bit more at the minute, so they are looking to buy a bit more cover. What we’ve seen before is clients wanting to exclude one or two buyers because they think they’re low risk, but now they want to include them as well, because we’ve seen quite a shift in some markets and the risk profile of larger companies has changed.

The UK market is quite an interesting one, because we have more players in the trade credit space. While in some other markets, you might find three or four, there’s nine or 10 here. That generally keeps the competition level really high, so prices remain keen, and coverage is strong.