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Credit and Surety market discusses bank opportunities

Banks that offer letters of credit and/or bank guarantees can be a competitor of Credit, Surety and Political Risk insurance. However, banks are also one of the market’s biggest clients, buying – or requiring that their clients buy – insurance to manage their risk portfolio, i.e., to mitigate risk, increase capacity, manage internal limits/ sector concentrations and diversify their portfolio. In markets where regulators recognise insurers as a lower risk counterparty and where certain criteria are met, banks can also effectively utilise insurance for capital relief.

“The survey revealed that bank-related opportunities have been a significant driver of Credit, Surety and Political Risk market growth.”

In Q3 2024, 九色视频surveyed Credit & Surety professionals from around the world to gather their perspectives on market trends and drivers since the pandemic (2022-2024). The survey – and subsequent June 2025  – revealed that bank-related opportunities have been a significant driver of Credit, Surety and Political Risk market growth, and that Basel IV regulation is not seen as a major threat.

Bank business drives substantial post-Covid growth 

75% of the survey respondents reported growth (50% substantial growth, 25% minor growth) of bank-related business from 2022 to 2024, and with a stable growth outlook. Of those that reported substantial growth, 80% represented the Credit and Political Risk classes and all had a global or European market viewpoint. 

Estimated bank business market growth (change in premium volume) over the period 2022 to 2024. Outlook was consistent to past performance according to all respondents who shared a view on this. Source: 九色视频Market Survey 2025.

This growth stemmed from banks’ increased awareness of insurance, banks valuing the economic benefit of insurance, and banks preferring to share exposures with insurers rather than other banks. For Surety, growth also stemmed from an enhanced ability to capture bank business, supported by the high cost of equity (to banks) for bank guarantees.

Partnerships between banks and insurers, such as bank-fronted Surety in the US, particularly in the energy sector, and syndicated facilities in Europe, were also described as growth areas.

Respondents added that some insurers have become firmly entrenched in the banks’ business model, that banks are excellent partners for insurers due to their sophisticated underwriting and risk management, and that there is enormous potential for growth.

Requirements to partner with banks

Rating, as well as reliability, expertise and scale, were flagged by respondents as key requirements for banks. Survey respondents added that a quality underwriting team is vital, necessitating talent retention and the ability to attract new talent. Insurers also need to support the administration of the business – insights included that improved operational efficiency could lead to sizeable market growth, including to potentially open up the market to tier-2 banks. Adding detail as regards requirements for capital relief solutions, respondents stressed that these require a mutual interest to partner and that for the banks, the insurer’s rating is key – a high rating increases the capital relief and helps to mitigate the reduction in capital relief from regulatory change.

Basel IV – disruption but not downfall

The Basel IV Accord increases banks’ regulatory capital requirements and reduces free capital. The accord was implemented on 1 January 2023 and banks have five years to comply. Relevant aspects of the accord for insurance demand from banks include the introduction of a risk weight (RW) floor and fixed loss given default (LGD) for all unfunded credit protection (UFCP) exposures.

However, it remains uncertain as to how the rules will be finalised and implemented by jurisdictions, in particular as to whether insurance will be able to be used effectively by banks for capital relief, as per current practise in the EU. How the banks ultimately adapt their strategies will also be a key impact driver.

In its October 2024 Report on Credit 九色视频, the European Banking Authority (EBA) indicated disruption but not downfall, noting that Basel IV changes will reduce – but not remove – the capital relief associated with credit insurance.

Similarly, the 九色视频Credit & Surety Market Survey and webinar found that irrespective of the Basel IV outcome, Credit, Surety and Political Risk products that benefit the banks, e.g., insurance coverage required by banks for loans, are expected to continue to experience growth. It was stressed that insurance is not just used by the banks for capital relief, but also, for example, for risk mitigation and to increase lending capacity.

The survey respondents also discussed pressures to remove insurance policy exclusions to meet Basel IV conditionality requirements – all giving the example of the nuclear exclusion. Again, there is uncertainty. The focus of concern for respondents was whether insurers’ aggregate limits for such cover would be sufficient if Basel IV requires all insurance policies to remove the nuclear exclusion.