Trade credit insurers face rising default risk from Middle East conflict

Trade credit insurers are confronting increasing pressure as deteriorating payment behaviour and rising non-payment risk coincide with heightened geopolitical uncertainty linked to the conflict in the Middle East, according to the Allianz Trade Global Survey.

The survey draws on responses from 6,000 companies across 13 markets and indicates that, despite a more challenging risk environment, global exporters remain largely confident about trade prospects. A total of 75% of exporters continue to expect positive export growth in 2026, showing that overall commercial sentiment remains resilient.

At the same time, risk perceptions have shifted significantly. Geopolitical and political risk has emerged as the leading concern for 65% of firms, overtaking supply chain disruption, which had been the primary issue in 2025. This change reflects a broader reassessment of external risks affecting international commerce, particularly those linked to ongoing regional instability.

The most direct effect on trade credit insurance markets is visible in payment performance. The conflict has coincided with a clear deterioration in payment discipline, with more companies experiencing extended settlement periods and a higher incidence of overdue receivables.

The proportion of firms receiving payments within 30 days has declined from 10% to 7%. Meanwhile, the share of companies reporting payment delays exceeding 70 days has increased from 15% to 24%. These figures indicate a structural shift towards slower payment cycles across multiple markets and sectors.

Forward-looking expectations also point to further pressure. Around 43% of companies anticipate that payment terms will worsen, representing a rise of five percentage points compared with pre-conflict levels. In addition, 40% of firms expect higher non-payment risk, an increase of six percentage points. These expectations suggest that firms are preparing for continued strain on working capital and credit conditions.

For trade credit insurers, these developments are significant because longer payment cycles typically increase exposure to liquidity stress among counterparties and raise the likelihood of claims. As a result, insurers are expected to intensify monitoring of insured risks and reassess credit limits more frequently in response to changing conditions.

Sectoral differences are also evident. Pharmaceuticals, construction, and computers and telecommunications are identified as the most exposed industries, reflecting their reliance on complex international supply chains and extended payment arrangements. The survey further notes that larger companies are experiencing more pronounced payment delays, indicating that even firms with substantial scale and resources are not immune to worsening payment conditions.

Key Indicators from Survey

Overall, the survey highlights a dual environment: continued optimism in export growth expectations alongside a measurable deterioration in payment behaviour and a rising risk profile for trade credit insurers driven by ongoing geopolitical tensions.