Retail and construction could be areas of concern for the trade credit market, an expert has said.
Mark Hoppe, managing director for ANZ at
Atradius, said the Christmas period is vital for retail as always, and can secure long-term stability for many businesses.
“There will be pockets of concern as there always are in retail and construction, but then they have a flow on effect to other industries,” Hoppe told Insurance Business. “We will see how things are travelling there, but if interest rates stay where they are, I am not an economist, but I think it will travel along OK.”
A recent report from The Herald Sun found that the Christmas period had outstripped the expectations of many in the sector, which points to good things when results are finalised in February. However, prior to Christmas, retailers fell under the microscope with Oroton announcing its closure following news that Gap would also shut its Australian business.
Overall, Hoppe stressed that 2017 was a year without major shocks for the trade credit market as even the Oroton collapse “wasn’t as big a shock as it could have been.”
“In Q1 last year, I was worried about what was going to happen in the construction market, particularly in Queensland and I thought they would have a similar year to what we had the previous year in WA,” Hoppe continued. “While there were a few losses in December, January and February, it really seemed to get itself in order.”
With the market currently in a holding pattern in some respects, Hoppe said he does not expect pricing changes in 2018.
“There have been price decreases for a number of years and they stabilised last year on the back of some losses,” Hoppe said. “I think prices have probably bottomed out, but I wouldn’t expect to see price increases coming through next year. I think we have the right balance at the moment.”
Meanwhile, for brokers operating in the market, Hoppe noted that it is important to keep clients informed of current developments in case of any unforeseen events.
“I think it will be, rather than all doom and gloom, about having this information and being aware that there are going to be people falling over out of the blue - and making sure you are well prepared should that happen,” Hoppe said.
Related stories:
Should the insurance industry be more open with its data?
Atradius reveals increase in late payments from B2B customers
.jpg)
