Howden: Instability in trading environment drives rising demand for CPRI

By Navneeta Nandan

May 22 - (The Insurer) - Growing instability in the global trading environment has seen an increase in demand for credit and political risk insurance (CPRI) cover from global multinational corporations, Howden said in a report on Thursday.

The broker said the larger share of CPRI premiums come from small and loyal customers. However, enquiries from US-focused Canadian exporters increase by approximately 10% in the first quarter of 2025, while 33% of >$1 billion revenue multinational corporates surveyed by the broker said they are more likely to purchase PRI cover due to tariff uncertainty.

The report said that stunted cross-border trade and investment may affect the underlying demand for the CPRI market in the short term but said that newer opportunities driven around increased risk aversion and potential government intervention will offset some of this slowdown.

Confidence in continued demand for CPRI comes from the stability in the penetration rate throughout the first half of the 2020s, despite multiple macroeconomic and geopolitical shocks. Howden said the client retention rate is 85% to 95% for major trade credit insurers, while penetration has fluctuated between 11% to 14% for the export credit market.

CPRI market supply increased in 2024, which Howden said owed to strong performance bringing in new capital. The market has reported an underwriting profit every year in the past decade and delivered a net combined ratio between 70% and 80%, the broker said.

There is strong underwriting appetite for this business but with persistent constraints for some industries. Howden pointed to supply chain finance, acquisition finance and commercial real estate as growth areas for the market.

Market expansion is also contingent on adequate reinsurance capacity, Howden said. But the broker support remains narrow, with 25 to 30 active reinsurers and "only a handful" of recognized lead underwriters.

Megatrends, including geopolitics and tariff turbulence, have also emphasized the need for CPRI protection, Howden added.