Trade credit insurance is being repositioned from a fallback option to a central component of corporate financial planning as Australian insolvencies rise sharply.
Data from Lockton Companies Australia shows a 43% year-on-year increase in company failures, with the construction, retail, and wholesale sectors the most affected.
The brokerage said that insurers now place greater weight on timely, accurate financial data and disciplined credit governance when assessing clients. Companies able to present clear information are more likely to secure supportive underwriting terms as credit exposures expand and insurers demand more transparency. Lockton noted that aligning risk strategies with insurer requirements is increasingly viewed as a competitive advantage.
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While the global economic outlook remains soft, the firm expects generally stable market conditions in the near term unless there is a significant loss event. Since 2019, trade credit insurance capacity has grown by 35%, but this expansion could slow if economic activity remains subdued. Insurers are maintaining a selective stance, especially toward manufacturing, retail, emerging markets, and accounts tied to high-demand obligors. In these sectors, companies may need alternative programme structures and access to additional capacity.
The update pointed to several themes shaping executive decisions: potential increases in claims if economic pressures worsen, risks tied to the failure of major customers or embedded receivables, and the use of blended insurance structures such as excess-of-loss or top-up layers to manage exposure. It also noted that banks are becoming more receptive to insured receivables when offering financing, which can improve access to credit.
Lockton said trade credit insurance can be applied not only to protect receivables from insolvency or default but also to extend terms to higher-risk or overseas buyers and to improve cash flow predictability.
For the 2025 financial year, the brokerage advised businesses to focus on visibility over their credit exposures, operational agility, and providing credible data to insurers as conditions tighten. It also suggested that organisations reviewing their credit policies or dealing with restricted credit limits consider redesigning their insurance arrangements to serve both protection and commercial objectives.
Do you think Australian companies are prepared to approach trade credit insurance as an integral part of their growth and risk planning? Share your perspective in the comments.
