Credit insurance most used in Germany

Europe

German companies are the biggest users of credit insurance in Europe, according to a survey of 1,200 companies from six European countries, conducted for credit insurer, Atradius. Some 36% of German companies which participated in the Atradius Payment Practices Barometer survey purchase credit insurance policies to reduce the risk of bad debt. The Netherlands was second with 34% and the UK third with 33%. However, credit insurance is only the second most popular protection tool in Germany, as 37% of firms use advance payment or cash as a means of protecting themselves against bad debt. Overall, 29% of the total number of companies surveyed made use of credit insurance. In July, Moody’s issued a report which noted that increasing use was being made of credit insurance in asset backed commercial paper transactions in Europe, the Middle East and Africa. Around 40% of the new trade receivables deals funded by EMEA ABCP conduits in 2004 and 2005 utilise credit insurance, up from 25% in 2003. Given that the use of credit insurance can help originators achieve off-balance sheet treatment under revised IAS 39, Moody’s believes that the growth in the use of such agreements is set to continue.