Credit insurer Coface has formally opened its New Zealand branch, after the Reserve Bank of New Zealand granted it a licence to operate.
Coface previously operated in New Zealand through an agency model, led by Chris Murphy and David Meys. Both Murphy and Meys will remain with the business as head of mid-market and distribution partners and commercial director, respectively.
Meys said that with the new licence, Coface is well-positioned to serve brokers and securitise trade for businesses of all sizes trading domestically and abroad. He added that rising global risk and economic tensions are bringing credit insurance to the fore. But despite flaring geopolitical tensions, rising costs of raw materials, supply chain issues and ongoing effects of the pandemic, rates for credit insurance are still at historic lows.
In 2022, Coface has seen an upswing in claims, as insolvencies play catch-up following the end of government stimulus. So-called “zombie companies” that would normally have failed have remained alive due to subsidies. Combined with record-high fuel and wheat prices caused by the Russia-Ukraine conflict, Coface has predicted immense pressures on companies’ balance sheets and these zombie companies liquidating.
Bernard Aw, Coface’s economist for Asia-Pacific, said that New Zealand inflationary pressures are intensifying, with the consumer price index at its highest in over 30 years for the fourth quarter of 2021, on the back of sharp increases in transport and household utilities costs. Aw predicted that a stagflation scenario, which is a combination of elevated inflation and faltering demand, will increasingly become a concern for businesses worldwide.
