Foundations for success in new credit insurance ventures

How can new players in credit insurance develop business models for sustainable success?

 

An increasingly interconnected and complex global economy is creating greater demand for credit insurance. Dominated by just a handful of major players for several decades, the credit insurance industry is in a state of change, with recent years seeing several new players emerge, including existing insurers, governments, and entrepreneurs.
New credit insurers are capitalising on growing demand, particularly in underpenetrated markets such as the United States, Asia-Pacific, Africa, and the Middle East. These markets may provide significant opportunities for new players to establish a presence and grow the overall market for credit insurance, rather than trying to compete with established players in established markets.
With governments also increasingly recognising the importance of credit insurance in supporting international trade, economic growth, and resilience, several new Export Credit Agencies (ECAs) have been established, and existing ones are expanding with new offerings such as for small and medium-sized businesses.
Although entering the credit insurance market can provide significant economic opportunity, long-term success is not guaranteed. Sustainable credit insurance business models require a deep understanding of the nuanced market dynamics and substantial investment in expertise and technology.

Introducing our comprehensive guide for new credit insurers
Embarking on a credit insurance venture? Developed by the team at Tinubu, a global leader in credit insurance software, our new 36 page guide offers a detailed roadmap for newcomers. Leveraging more than two decades of expertise, we share invaluable insights into the critical aspects of planning and sustaining a successful credit insurance business. The guide not only highlights essential foundational steps, but also features real-world case studies of successful startups and exclusive Q&As with industry leaders. Below, we summarise the key components to help you navigate your new venture with confidence.

Understand the market dynamics and identify the gaps
Before entering the credit insurance market, conducting a thorough market study is essential. This involves understanding the existing market dynamics, identifying gaps in coverage, and assessing the appetite for credit insurance among potential customers. In regions where credit insurance is underdeveloped, engaging with regional banks and large corporations can provide valuable insights into market needs. Understanding competitors and risk sectors is also crucial for preparing a viable business plan. As prospects unfamiliar with the industry often perceive credit insurance to be complex and obscure, be prepared to explain what it is and its benefits.

Secure a core team of credit insurance experts
As a specialised industry, credit insurance requires a deep understanding of credit risk assessment, underwriting, and claims management. New players need strong capabilities in these areas, so building a core, committed team of experienced professionals with a strong track record and an established network should be a priority. This is key to competing effectively and building credibility with customers, reinsurers, and brokers.

Differentiate your offering
A compelling value proposition is critical for attracting customers and differentiating your business from established players and existing products. Product development should focus on creating solutions tailored to specific market segments with an identified need. For instance, targeting SMEs may require simple, fully automated products that are easy to manage.
The credit insurance industry is embracing digital solutions, but many established players still retain their legacy systems, so new players may also gain a competitive edge by positioning themselves as fully digital and offering efficient, customised services.

Choose a business structure and secure investment
Business structures can vary depending on whether the venture is a completely new startup or a diversification of an existing insurer's portfolio. The choice of business model, whether operating as a fully licensed insurer or a Managing General Agent (MGA), will impact the scope of services and operational complexity. MGAs can offer a faster route to market with lower capital requirements, but fully licensed insurers may have more flexibility in their product design and differentiation. Regardless of the model, substantial capital investment will be needed to establish and scale the business, and new entrants must demonstrate a sound business structure and capability to attract the necessary funding.

Determine the most effective distribution channel/s
An effective distribution strategy is key. Established insurers may leverage their existing internal distribution networks to launch new products. However, for new entrants, partnering with brokers and banks may provide a quicker and easier route to market – as their existing relationships and knowledge of credit insurance make them valuable partners in reaching potential customers. Emerging insurtech platforms may also offer innovative distribution channels that can complement traditional methods.

Embed an operating system for key workflows
Credit insurance involves complex workflows that require efficient management to ensure profitability. Key workflows include commercial underwriting, risk underwriting, and claims management. Investing in a robust core operating system from the outset is crucial for optimising back-office efficiency, enhancing governance, and providing comprehensive reporting. This investment can support faster growth and minimise the need to restructure down the track.
New players must decide whether to build their own system or purchase an existing platform. Given the rise of Software as a Service (SaaS) platforms, purchasing an established system is often the most efficient and cost-effective solution.

Embrace digitisation for return on investment
For new players to be competitive, embracing digitisation is not just an option but a necessity from the outset. Digital transformation is reshaping the credit insurance industry, with insurers and ECAs increasingly adopting advanced data analytics, AI, and machine learning to enhance risk assessment, streamline underwriting processes, and enable real-time monitoring. Turnkey digital platforms such as Tinubu are enabling credit insurers to tailor solutions to the specific needs of their customers, improving efficiency and decision-making capabilities.

Learn more about launching a new credit insurance venture
For a deeper dive into these essential considerations and to read about new credit insurance success stories as well as in-depth interviews with industry experts, you can now download Launching a new credit insurance venture in full from Tinubu’s website and read Benjamin Le Forestier’s latest blog post in which he shares the 7 critical steps to help launch a successful credit insurance business from market analysis to building a go-to-market strategy.

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About the Authors
Olivier Saint-Raymond, Solutions Expert
Olivier joined Tinubu in 2016 as Chief Product Officer to drive the evolution of the Tinubu platform. Today, as Solutions Expert, he supports Tinubu and its customers in identifying and defining new initiatives to expand the capabilities of the Tinubu Credit Insurance platform, especially in the MLT credit insurance or Trade, Receivable & Export Finance sectors.
Olivier has over 15 years of experience in the software industry. He started his career in 2006 as a Technical Account Manager at GL Trade Hong Kong. Then, he held various product management roles in the electronic trading industry at Fidessa, SunGard, and Société Générale, both in Hong Kong and in Paris.
Olivier holds an MSc in Engineering in Computational Fluid Dynamics from Grenoble INP - UGA.

Marc Meyer, SVP Subject Matter Expert Insurance
Marc joined Tinubu in 2005. With more than 30 years of experience in the Trade Credit Insurance industry, he plays a major role in developing the international portfolio.
Marc started his career in 1989 as a credit analyst at NatWest. In 1993, he joined Euler as a senior Risk Underwriter. He then participated in and led projects that resulted in the acquisition and opening of 14 subsidiaries in 13 countries across Europe, South America, and Asia, and took part in the merger with Hermes.
He holds a master’s degree in Public & International Laws and Policies from Poitiers University, and a diploma in Public Service from Sciences Po Paris.