Rising Interest in Trade Credit Insurance Amid Tariff Tensions

Interest in trade credit insurance is increasing among Canadian exporters due to U.S. tariffs introduced by President Trump. While common in Europe, this insurance is less prevalent in Canada, despite rising inquiries. Experts warn of potential bankruptcies, pushing more businesses to consider coverage for their foreign transactions.

A once-overlooked insurance product is gaining traction in Canada as exporters seek to protect their businesses from losses due to U.S. tariffs imposed by President Donald Trump, according to industry insiders.

Trade credit insurance, which covers insolvencies of foreign customers, has been widely adopted in Europe, yet remains underused in Canada. Currently, less than 1% of overseas payments by Canadian businesses are insured, despite these transactions comprising 40% of their revenue. The introduction of U.S. tariffs has increased inquiries into this type of insurance, despite initial hesitations over coverage uncertainties.

The Receivables Insurance Association of Canada reports a spike in interest, with a 10% increase in coverage inquiries since January. With Canada's exports primarily directed to the U.S., unforeseen tariffs have begun affecting order books and margins, prompting companies to consider credit insurance as a buffer against potential bankruptcies.

(With inputs from agencies.)