Geopolitical conflicts, high inflation, climate change, and natural disasters are some of the biggest risks that companies around the world face today, all of which can affect an entrepreneur’s ability to pay. Therefore, it is not surprising that there is an increasing demand for receivables insurance, as Janos Kis, Director of Risk Insurance at Acredia and General Director of Acredia SEE, tells us, since the beginning of this year until May, the number of insolvency cases in Croatia has increased by as much as 9.1 percent compared to last year.
Since Acredia, the largest Austrian trade credit insurance company specializing in protecting the collection of receivables for companies worldwide, has been operating in the Croatian market since 2012, first under the Allianz brand and since 2022 under the direct name – Acredia SEE – Kis explained to Lider all about the trends of insolvency in Croatia, as well as in the rest of Europe and the world. He also revealed what the most common risks for domestic entrepreneurs are.
What is the demand for credit insurance in Croatia?
– While companies around the world are credit insuring and entrusting risk management to third parties to enhance their credit capabilities and protect themselves from collection difficulties, credit insurance remains relatively unknown in Croatia. Research we conducted in 2022 among medium and large Croatian companies shows that more than eighty percent of them do not have credit insurance. One reason is the term ‘credit insurance,’ which can be misleading because it primarily emphasizes the concept of ‘insurance.’
The prevailing attitude is: ‘I know my customers and trust them. I don’t need insurance against non-payment.’ They do not realize that professional risk management saves time and money. That is why we have collected data from over 83 million companies worldwide that show their payment behavior, among other things. If a company in Sweden does not pay for office cleaning, we know that and can alert our customers when considering whether to do business with it. We analyze risks by countries and industries and make credit decisions based on the collected indicators. The insurance service is just the icing on the cake.
So, there is a need to educate the market?
– It is clear that there is a need for market education on how financial risks can be managed through credit insurance and why it is essential for ensuring liquidity and business stability. Croatia has experienced economic growth in recent years, but challenges still exist. Future periods of economic downturn or instability could increase debt and demand for receivables collection services. In addition to negative economic trends, our services are attractive to users due to the complex processes of receivables collection. Long and costly court proceedings can increase the risk for companies engaged in receivables collection, as well as the complex regulatory environment and possible changes, as new regulations affecting receivables collection practices could bring new risks.
How developed is the credit insurance market in Croatia compared to Europe and the world?
– Some key factors influencing the development of the credit insurance market include economic conditions, the volume and complexity of trade, risk perception and tolerance, the regulatory environment, the maturity of the insurance market, and competition among insurers. The global credit insurance market has grown significantly in recent years due to the increase in international trade and the growing complexity of business relationships. Although Europe remains dominant, other areas, such as Asia and North America, have also developed significantly.
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