HISTORY, NATURE AND IMPORTANCE OF TRADE CREDIT INSURANCE

The first hints of modern trade credit insurance came at the end of the 18th century. In 1766, a Prussian professor Wurms proposed to authorities a type of insurance to cover maritime risks in order to reduce losses caused to merchants.

In 1839, an Italian, Bonajuto Paris Sanguinetti, published his work: ‘Essai d'une nouvelle théorie pour appliquer le système des assurances aux dommages des faillites’ (‘Essay of a New Theory to Apply Insurance to the Losses Caused by Bankruptcies’). He is considered the founder of Credit Insurance in a defined approach.

In 1849 the Banque Mallet Frères et Cie in France was the first to cover trade credit risks, an example quickly followed by four other banks in Paris. After an initial great success these banks had to stop their credit insurance activities because of difficulties with the strict separation between banking and insurance. By supporting overdue buyers of their insureds, they sustained many losses and decided to cease writing credit insurance in France.

The credit line is generally considered to have originated in the United Kingdom, where property and casualty insurers were already covering credit business in the middle of the 19th century, and from where credit insurance spread to continental Europe around the end of the 19th century.

The oldest specialized credit insurer still operating today was founded in 1893 in the USA, but credit insurance never really took hold in the USA during the next 100 years. Only since about the turn of the millennium has credit insurance in the USA been undergoing a noticeable upswing, albeit still low in comparison to Europe.