Assessing the Impact of Economic Fluctuations on Trade Credit Insurance

As economic fluctuations persist into 2026, trade credit insurers are observing mounting stress among middle-market companies. There is a notable rise in payment delays and insolvencies, even though large corporate failures have remained somewhat contained. This trend highlights the vulnerabilities faced by smaller firms in the current economic climate.

Pablo Brando, president of trade credit in the U.S. at Intact Insurance Specialty Solutions, noted the increasing complexity of the risk landscape. He attributed this to factors such as geopolitical tensions, tariff fluctuations, and supply chain disruptions. These overlapping events are leading to more defaults among smaller firms, despite a relative scarcity of high-profile bankruptcies.

Data from S&P Global Market Intelligence revealed that 785 U.S. companies filed for bankruptcy in 2025, marking the highest number since 2010. Global business insolvencies also increased by 10% in 2024 and about 6% in 2025, with expectations for a further 6% rise in 2026, as reported by Allianz Trade. These trends are driven by rising borrowing costs, declining demand, and trade disturbances.

Even though there have been no major catastrophic claims, the insurance landscape is characterized more by the frequency of issues rather than their severity. The unpredictability added by fluctuating tariffs complicates risk assessment. Initially, risks centered on buyers, but there is an increasing realization that they might extend to the buyers' suppliers, which adds layers to the risk management challenge.

Changes in payment behavior are one of the earliest signs of distress in middle-market companies. This provides a window for corrective action before insolvency becomes inevitable. However, this predictability is less certain with large multinational firms, which might abruptly cease payments, posing sudden risk exposure for insurers.

Dependence on a narrow customer base poses additional risks, especially with potential difficulties from key buyers. Insurers are advising clients to evaluate not only their buyers but also their suppliers and upstream dependencies in risk management strategies. Brando emphasized the increasing value of trade credit insurance beyond non-payment protection, suggesting its broader application in managing risks, particularly in sectors like manufacturing, agriculture, energy, and aerospace.

With ongoing geopolitical instability and economic uncertainties, static financial assessments are insufficient. It's crucial to consider supply chain vulnerabilities, geographic and political risks, and market dependencies, particularly in sensitive sectors like energy. Brokers are encouraged to integrate trade credit insurance more comprehensively within enterprise risk management frameworks, with some clients leveraging insurance to enhance borrowing capacity or facilitate growth in international markets. Brando concluded by advocating for preparation and proactive planning to effectively handle uncertainties, asserting, "Resilience comes through preparation, not reaction."