One dollar now buys $699 of protection

I owe money.

Not much. A designer invoiced me three weeks ago. Thirty days, due at the end of the month. She did the work, she sent the file, and now she waits on me.

You have been on one side of that. Probably both sides.

Every business on earth runs on that gap. Goods go out. Money comes back later. In between, somebody carries the risk that it never comes back at all.

There is an insurance market for that gap. Trade credit insurance. It is about as unglamorous as finance gets.

It is also one of the best early-warning systems I know of. The people who sell it have to open the books of every company buying on credit. They watch payment behaviour before a rating agency writes a word about it.

So I went and looked at what they charge.

One dollar of premium now buys $699 of cover. In 2023 the same dollar bought $430. That is the cheapest protection against a customer not paying you that the broker Marsh has ever recorded.

Meanwhile, companies are failing at a rate we have not seen since 2010.

Allianz Trade, the largest credit insurer in the world, expects global business insolvencies to rise 6% this year after rising 6% last year. That would be the fifth straight annual increase, and about 24% above the pre-pandemic average. US insolvencies up 9%. China up 9%.

The insurers are holding more risk for every dollar they take in. There is less behind them when the claims arrive.

So the price of insuring against failure sits at a record low. The rate of failure sits at a 13-year high. Those two numbers describe the same companies.

I have no idea when this turns.

But the people setting this price are the same people who pay the claims. They hold the best credit data in the market. Right now they are using it to compete with each other on price.

I find that interesting. Not comforting.

This connects directly to the question of who is actually watching corporate credit right now. The odd part is not that outsiders missed it. The insurers say it out loud.

Coface reported its first half on July 30. Xavier Durand, the chief executive, named three trends shaping the period. Weak growth hit by repeated shocks. Rapid growth in the use of data. And business bankruptcies that remain at record levels.

The same document says pricing came in 1.3% below last year. Client retention held near a record at 93.6%. The net combined ratio was 71.3%, against a through-the-cycle target of 78%.

Read that again. The company says failures are at record levels, and its own underwriting result is seven points better than what it plans for across a full cycle.

The strain shows up somewhere else. Premium growth was negative across its main European markets: the UK down 5%, Germany down 4%, France down 4%, the Netherlands down 3%. Net income fell 13.2% to €107.8 million.

So the losses are fine and the revenue is shrinking. That is what a market looks like when everyone is competing on price.

And here's where it spreads.

First Brands Group filed for Chapter 11 on September 28, 2025. It made wiper blades, filters and brake parts, and sold them to Walmart, AutoZone and NAPA.

With the filing it disclosed $6.1 billion of funded debt on its balance sheet. Then another $2.3 billion of financing through special purpose vehicles. Then about $800 million of unsecured supply chain financing. Then about $2.3 billion of factoring liabilities.

The structures sat inside 112 bankruptcy-remote entities. A lender reading the reported leverage saw one company. The filings describe another.

Court filings then raised whether some receivables had been sold to factors more than once, and whether some invoices existed at all. The Justice Department opened a criminal investigation in October 2025. The court appointed an examiner with a $7 million budget. No findings have been issued yet.

Jefferies disclosed $715 million of exposure to those receivables through its Leucadia funds.

An invoice is a promise. Insurance on an invoice is a promise about a promise. If the invoice was sold twice, the underwriter priced something that was never there once.

Meanwhile, the International Association of Insurance Supervisors published its market report for 2025. It graded the risks across every underwriting line.

Trade credit came out as the only line sitting above the low-to-medium band. Not property. Not casualty. Not cyber.

The reason they gave is that new trade barriers, sanctions and export restrictions produce defaults that historical data cannot predict. The models were built on a world where goods moved freely.

There is a second problem underneath that one. A growing share of the companies buying on credit are financed by private lenders rather than banks.

The headline default rate in private credit, counting only outright missed payments, sits below 2%. Count the distressed restructurings and the liability management deals alongside it and the effective rate of stress runs closer to 5%.

An underwriter reads ratings, filings and bank lines. None of those show you who is being kept alive by an amendment signed last month.

Three more things worth keeping track of…

New Zealand is raising rates. The Reserve Bank lifted its cash rate by 25 basis points to 2.75% in September, the second consecutive increase, with inflation running above target after the oil supply shock. A small central bank tightening into an energy squeeze while the Fed waits is not a common sight. The kiwi economy rebounded to a 2% annualised pace in the first quarter, so they have room. It still tells you what an oil price does to a country that imports all of it.

The rand and the real split apart. Of 22 currencies tracked in August, the South African rand was the strongest and the Brazilian real was the weakest. These two normally travel together, because both are commodity exporters with wide deficits. This time reforms, lower inflation and strong commodity revenue pulled one way, and fiscal strain plus election uncertainty pulled the other. When emerging currencies stop moving as a bloc, somebody is making a distinction that the index funds are not.

American freight is recovering. Spot truckload rates have moved above contract rates for the first time since 2021. Tender rejections are at multi-year highs. The industry's Freight Rail Index has climbed to its highest level since 2008 after four straight monthly gains, and July intermodal set a record for the month with a 6.1% annual rise. Goods are moving well. Businesses are still failing at record rates. Both of those are true at once, and I would not bet on which one leads. We'll see.

On March 15, 2001, Australia's second-largest insurer asked a court to put it into liquidation.

HIH Insurance had been listed for about ten years. It grew by buying other insurers. It wrote workers' compensation, professional indemnity, public liability and builders' warranty cover. Ordinary business, sold to ordinary customers.

It reported profits through most of that decade.

The liquidators put the hole between A$3.6 billion and A$5.3 billion. The largest corporate failure in Australian history at the time.

A Royal Commission spent two years on it and published its report on April 16, 2003. It did not conclude that fraud or embezzlement caused the collapse.

What it found was simpler. HIH had not set aside enough for the claims it would have to pay. It had not charged enough for the policies it had already sold.

Every policy HIH sold was valid. The money to pay on them was not there.

You could see it years earlier in the underwriting line, if you knew to look there. In 1997 HIH lost A$33.8 million on underwriting against A$1.233 billion of net earned premium. By 1999 the underwriting loss had more than doubled to A$73 million, while premium rose 25%.

More business each year. A bigger loss on every dollar of it. The growth was the problem rather than the cure.

Then the bill arrived at the people who had bought the policies. Almost A$2 billion of Australian construction work stopped while builders looked for someone else to write their warranty cover. The few insurers still in that market were swamped with applications, and for many builders the wait ran for months.

Those builders had done everything right. They bought the cover. It was cheap, and it came from the second-largest insurer in the country.

That was the problem. A low price on an insurance policy is not a discount. It is a forecast about how often the insurer expects to pay.

Forecasts get revised. We'll see.