At the recent AICM National Conference in Canberra, I hosted an economic panel made up of key players in the credit insurance industry and posed a number of questions to the audience.
Question 1 - Colour code the Australian Economy.
Overall, there were pro's and con's for the Australian economy. Whilst Australia's banking and financial sector is solid, there are still pockets of industry sectors causing concern.
This led to the bulk of the audience suggesting that some caution needed to be exercised. Only 5% considered the economy as being in a dangerous or unstable condition with just over 10% being much more optimistic.
International political and economic risk was next on the agenda. Australia's competitiveness in some sectors has ground to a halt, due to our high labour, electricity, and power costs. Clearly there are countries with which Australia cannot compete on labour costs. Despite our natural resources, the energy sector seems to be a thorn in the side of industry. These are two areas which need to be focussed on if Australia is to become more competitive.
Question 2 - What global zone concerns you more (political and economic risks)?
In this regard, 'Asia' received 47% of the votes, followed by America, the Middle East and Europe. It was pleasing to see that Oceania only received 1% of the votes.
Given our location and reliance on Northern Asia, it is probably understandable that the concerns around political and economic risk are directed at Asia. Their influence on Australia is critical to our economy moving forward.
Question 3 - What industry sector is likely to have the greatest impact on future economic conditions?
In moving our attention to industry sectors, the panellists were clearly concerned with the construction industry where the bulk of credit insurance claims have come from over the past 2 years. Despite this, there is still a high level of cover and appetite for the sector which generates a significant amount of premium for the trade credit insurance market.
The interactive question relating to 'industry sectors to be impacted most by future economic conditions' were ranked by the audience as Construction, followed by Retail, Manufacturing and Mining.
Lastly we discussed matters impacting the credit world.
Question 4 - What will have the greatest impact on the availability of credit over the next 3 years?
Not surprisingly, audience responses highlighted (at almost 50%) digital factors as being likely to impact credit the most. Followed by cash flow requirements (banking/factoring) and then insolvency law reforms.
With each of these elements playing an important role in developing credit facilities into the future, we need to ensure that our systems and processes, both in terms of technology and people, are properly integrated and focussed on streamlining the assessment and approval of credit and in collecting payments.
National Credit Insurance Brokers (NCI)