Introduction – A New World Order for Trade and Investment
The geopolitical landscape has become increasingly turbulent, with rising great-power competition, economic fragmentation and frequent shocks—from wars to tariffs—disrupting global trade. For Export Credit Agencies (ECAs), these shifts are not just macroeconomic concerns but direct drivers of claims frequency, recovery challenges, and new underwriting risks.
There is no question that ECAs play a critical role in stabilizing international trade by absorbing risks that private insurers cannot or will not cover, particularly in emerging markets. However, as geopolitical instability intensifies, the traditional models of claims assessment and recovery are being tested. This article analyses how the current geopolitical environment is reshaping claims handling in political and commercial risk insurance, focusing on economic mechanisms, emerging trends, and strategic adaptations for ECAs.
The Rerouting of International Trade Flows
The rerouting of international trade flows is arguably a result of the economic policy of the current administration of the United States. Focused on the interplay between fiscal and monetary decisions, and their spillover effects on global trade imbalances and foreign trade policy, the current American administration believes that the strength of the USD—driven by its status as the global reserve currency coupled with domestic fiscal and monetary policy—is hurting the American balance of trade and making U.S. exporters less competitive.
To address this imbalance and what it deems “unfair” barriers to American exports, the administration has erected import barriers that are rerouting the trade routes established since the end of the Second World War. The ripple effects of this policy span the globe and range from increased commercial risk to higher borrowing costs, which in turn have direct effects on political stability in Heavily Indebted Poor Countries—manifesting as increased debt burdens, delayed or derailed reforms, and pressure on local currencies. In many respects, the knock-on effects resemble those of a kinetic conflict: disrupted logistics, strained relationships and greater uncertainty over contract performance.
This rerouting of global trade routes and associated geopolitical and economic turbulence is reshaping the risk landscape for ECAs with profound implications for underwriting, claims handling, and recoveries management. ECAs may soon need a fundamental review of their existing underwriting and claims processes to further support exporters in these unprecedented times.
Underwriting in New and Unfamiliar Markets
To maintain their export levels, many companies are seeking new markets previously thought challenging or unfeasible. Consequently, underwriters face pressure to expand into fast growing but untested markets—often frontier economies where information gaps, inefficient legal frameworks, and opaque regulatory environments heighten uncertainty.
This pressure is becoming apparent in export-oriented economies traditionally reliant on U.S. markets; producers and exporters are seeking state support to compete in new markets and manage working capital. The results are often innovative products—such as local guarantees by the ECA—aimed at supporting exporters maintain liquidity while adapting to smaller and slower markets. These bespoke facilities may include partial credit guarantees cofinanced with domestic banks, or dual currency instruments that blend importer and exporter currency denominated tranches to mitigate FX risk.
Escalating Claims Frequency and Severity
At the same time, the frequency and severity of claims are rising, driven by payment defaults, contract frustrations, and even opportunistic fraud as some attempt to exploit gaps in the claims assessment processes. Recoveries, meanwhile, are becoming more protracted and complex, particularly straining smaller or financially vulnerable exporters who lack the liquidity to endure lengthy disputes or delayed payments.
This triple pressure—riskier underwriting, surging claims, and strained recoveries—demands that ECAs adopt more dynamic risk assessment tools, strengthen fraud detection, and develop flexible financing solutions to support exporters through volatile cycles. For instance, some ECAs are piloting machine learning platforms that screen incoming claims for red flag patterns—such as abrupt invoice value fluctuations or repeated use of intermediary shell companies—allowing for faster triaging and targeted investigations.
Increased Risk of Fraud
As we have seen over the past years, there is a clear and strong correlation between economic uncertainty and credit insurance fraud. Therefore, it is not surprising to see a surge in fraudulent transactions currently being discovered at various stages in the export financing and credit insurance cycle.
Mostly, export finance and credit insurance fraud take place at two points: the application stage targeting underwriters and lenders, and the claims stage targeting claims managers. Common examples of fraud include cases whereby exporters and buyers collude to fabricate application documents (including fake financial statements) to seek low cost ECA backed financing, or—in extreme cases—with the intention of not repaying the insured or loan amounts. While fraud is relatively easy to detect in transactions involving mature and established markets, it does not readily stand out when underwriting transactions in new frontier markets, which consequently adds to the risks underwriters usually face.
There is also a noticeable increase in claims that are fraudulent. The types of fraud encountered at the claims stage usually take the form of fictitious transactions, inflated claims values, or false certificates of completion. Again, the lack of familiarity with new markets makes detecting such fraud challenging for claims managers.
Traditional and Political Risks Amplified by Geopolitics
Naturally, fraud is not the only risk underwriters face in the current geopolitical environment. The uncertainty and disruptions to supply chains heighten traditional risks such as currency‑convertibility and transfer restrictions (capital controls), commercial risks arising from increased costs of production and finance and even increased risk of sovereign defaults. In other words, the volatility makes these unprecedented times challenging even for the most skilled and experienced underwriters.
- Commercial risk: disrupted supply chains, higher production costs and tighter access to finance have led to increased bankruptcies and payment defaults.
- Sanctions risk: broad and targeted sanctions can retroactively invalidate contracts, freeze assets and block remittances, triggering unexpected claims.
- Currency convertibility and transfer risks: sudden devaluations and capital control measures erode receivable values and strand funds.
- Sovereign default risk: elevated debt burdens may result in restructuring or moratoria that impact exporters’ ability to repatriate proceeds.
- Logistics disruptions: attacks on maritime chokepoints have increased transit times and surcharges, undermining delivery commitments.
Faster Claims and Recoveries Management
Being the “shock absorber” of economic turbulence, ECAs are expected to enhance the processing of claims and recoveries. We are noticing a gradual increase in claims across all credit lines (short-term, medium/long-term, and project finance) and expect a further rise by early 2026—the point at which companies may be required to permanently adapt to a slower global economy, and in turn may default on their existing obligations.
To support their exporters, ECAs are advised to plan for fast and accurate claims management procedures, with special focus on fraud detection. On the one hand, faster claims processing not only improves the reputation of the ECA, but—more importantly—financially supports the exporter. However, the pressure to quickly process claims may expose vulnerabilities and present opportunities for fraud. Therefore, it is best that ECAs grow their local presence (whether directly through satellite offices or through a network of partners) to quickly examine and verify claims locally in the buyer’s country, ensuring that both speed and accuracy are maintained.
Similarly, the traditional recovery models likely need to be adapted to the current circumstances exporters are facing. Expecting exporters to endure lengthy recovery processes (which may span years) and/or spend exorbitant amounts on prolonged legal procedures may place undue strain on their working capital and increase the pressure on companies that are already stretched to their limits.
Therefore, traditional compromise-based solutions such as provisional indemnification may need to be applied to ensure policyholders are supported appropriately, while protecting the ECA’s rights to claw back any indemnity amount that should not have been paid. Additional measures include:
- Partial payout mechanisms: disbursing a predetermined percentage of the claim upon preliminary validation, with the remainder released upon final audit or settlement.
- Structured settlements: establishing deferred indemnity structures that align disbursements with the exporter’s cashflow recovery, reducing immediate cashflow shocks.
- Mediation and alternative dispute resolution: prioritizing out of court settlements to cut down on legal fees and time, leveraging neutral experts for binding rulings.
Innovation and use of technology to enhance the speed and accuracy of communication also plays a critical role, especially between the ECAs, lenders, network partners, and policyholders. Crisp fast turnaround of advice and guidance can help improve efficiencies and shorten the time required for making decisions; especially if IT systems communicate automatically and directly among each other using established digital standards, such as those proposed by the International Chamber of Commerce’s Digital Standards Initiative.
Regional opportunities in a global slowdown
While the U.S., Europe and parts of APAC contend with sluggish growth, other regions are gaining momentum and opportunities persist.
In Saudi Arabia, the Vision 2030 reforms are generating major infrastructure and tourism projects. The ECA landscape here is evolving toward large ticket, medium to long term facilities underpinned by sovereign or quasi sovereign guarantees.
Elsewhere in the Middle East, the UAE remains a regional safe haven. Political stability, liberal foreign ownership rules and robust financial centres continue to attract investments and expatriates, sustaining demand for short-term working capital guarantees and forfaiting facilities.
In Sub-Saharan Africa, the African Continental Free Trade Area (AfCFTA) is unlocking intraregional commerce, particularly in agro-processing and light manufacturing. ECAs are able to facilitate this growth by offering pan African payment risk coverage and local currency guarantees. The region’s infrastructure needs persist, with road, rail and energy projects—often structured as public private partnerships—requiring blended finance solutions, combining ECA support with concessional funding from development banks.
Elsewhere, energy transition projects in Brazil, Chile and India attract private capital but carry off-taker and currency risks – requiring ECAs to underwrite with tailored political risk wraps and FX contingent hedges.
Irreversible change…opportunities, and the way forward
The United States’ push to soften the USD, reshore production, and erect trade barriers marks an irreversible pivotal shift in global trade dynamics, creating both challenges and opportunities for exporters. While these changes are likely to permanently change traditional supply chains and financing models, they also open doors to emerging markets and trade routes less susceptible to Washington’s policy swings.
With trade among Global South nations—particularly in the Middle East, China, India, and Latin America—gaining momentum, exporters have a chance to diversify their portfolios and reduce geopolitical risk. Governments and policymakers in frontier and emerging markets are presented with unprecedented opportunity to invest in the development of their legal systems (including company information and transparency) to attract trade and investment that ultimately expedite development and improve their international competitiveness and living standards.
However, until such developments start reaping benefits, venturing into these markets requires robust ECA support to navigate uncertain legal environments, mitigate payment risks, and secure financing.
As the global trade landscape evolves, ECAs will play a critical role in bridging gaps, ensuring liquidity, and enabling businesses to capitalize on these new opportunities while managing heightened risks. ECAs are also presented with an opportunity to innovate and grow their offering to support high-value exports such as intellectual property, software, and services, to cater to the evolving nature of value creation in today’s economies. In this new world order, innovating new export support models along with the agility of claims handling and the creativity of recovery solutions will determine who thrives—and who falls behind.
