**(00:00)**

Okay, so for everyone joining, thank you for taking your time this morning, this afternoon, or this evening from wherever you're joining around the world. If you're in Australia, thank you for spending the next half hour with us on what I think is a really important topic in today's climate.

**(00:21)**

Just before we get started, a bit of housekeeping. If you have any questions or issues, please use the chat or Q&A on the right-hand side of your screen. If you experience any audio issues, use the same chat function and we'll try to help you in the background.

**(00:40)**

Prudence, thank you for joining us again. If you can move to the next slide, let's kick it off.

For everyone joining us, my name is AJ Singh. I'm one of the Co-Founders and CEO of ezyCollect. Some of you may have heard from me before, and some of you may not have. Today isn't about me. Today is about Prudence and National Credit Insurance (NCI).

To quickly introduce Prudence, she's the Joint Managing Director of National Credit Insurance, one of the Asia-Pacific region's leading trade credit insurance brokers.

Why are we here today? ezyCollect and NCI share a common mission: helping businesses get paid faster. NCI extends beyond what ezyCollect typically does around automation and systems. It helps businesses protect and insure their debtors, providing that next stage of protection.

It's a highly complementary partnership. We help businesses at the early stage of collections, while NCI helps at the later stage. In a climate where late payments, tighter cash flow, and business insolvencies are all on the rise, protecting your receivables has never been more important.

Having Prudence here is a special privilege. She's been with NCI since 2006 and is widely regarded as one of the best in the field when it comes to helping businesses manage credit risk in today's economy.

Prudence, without embarrassing you further, is there anything you'd like to add?

**(02:26)**

No, that's fabulous. Thank you so much.

Thank you to everyone who has taken the time to join us this morning. Trade credit insurance isn't always the most exciting topic, so I appreciate everyone being here to discuss the issues we're seeing across Australia and globally, and ways businesses can protect themselves during these uncertain times.

**(02:56)**

I think the context is why this is so important today. We're seeing a very challenging environment. We see it with our client base and with our clients' customers as well.

**(03:15)**

Absolutely.

Many of you are probably finding that your debtors are slower to pay than normal. That's certainly reflected in our data and in conversations with our clients.

During 2025, we've seen 14,722 businesses fall into insolvency. That's extremely high and represents a 33% increase year-on-year.

NCI has also seen a 10% rise in what we call notifiable events. These are events that trigger the insurance market to look at a debtor more closely. They might include collection activity, cash flow issues, or businesses advising they cannot pay on time.

We regard this data as extremely important because it often signals future collection problems and potential claims.

We know there are tighter lending conditions at the moment, and we're expecting further interest rate pressures. We'll discuss this in more detail shortly.

Construction accounts for over 3,500 insolvencies in FY25, representing approximately 24% of all insolvencies. I expect that figure to rise significantly into the next financial year.

We've also seen a 54% surge in insolvencies within the transport sector. That's unsurprising given fuel costs, supply uncertainty, and broader economic pressures.

We're also seeing increased bankruptcies within the property sector and among businesses supplying the property sector. As investment appetite slows, businesses servicing these industries are experiencing greater financial distress.

**(05:30)**

Absolutely.

I was listening this morning and noted that inflationary pressures remain a concern. Wage increases and broader CPI trends suggest inflation may continue to challenge businesses moving forward.

We're also monitoring unemployment data closely. The unemployment rate remains lower than what would typically support broader economic stability, and combined with everything else happening in the economy, it creates a very uncertain six-month outlook.

**(06:16)**

Getting into the next slide, you're probably wondering who we are.

AJ provided a great introduction, but let me tell you a little more about NCI.

I've been with the business for 20 years. During that time, I've seen several major economic cycles, including the Global Financial Crisis and COVID-19. These experiences have given us significant insight into the challenges businesses face and how we can best support them.

NCI was established in Adelaide in 1985, making us nearly 40 years old. We're part of the Steadfast Group, the largest general insurance broking network in Australasia and an ASX Top 100 company.

We have a global presence with offices in Australia, New Zealand, Singapore, Malaysia, and London. Our goal is to provide businesses with valuable information that helps them stabilise and grow.

We support approximately 3,500 clients across a broad range of industries.

NCI is the leading specialist trade credit insurance broker across Asia-Pacific, holding approximately 70% market share in our segment.

**(08:22)**

You're probably wondering a little more about trade credit insurance.

Its primary purpose is to protect businesses against insolvency and protracted default.

Many people don't realise that coverage levels can range between 85% and 95%. The market is currently very competitive, with insurers offering increasingly favourable terms.

Historically, 90% coverage was common. More recently, we've seen insurers offering 95% coverage, resulting in higher claim payments when losses occur.

The objective is simple: inject cash back into your business quickly when a debtor fails, allowing you to continue operating without disruption.

Coverage extends beyond insolvency. It also covers protracted default, where a debtor stops communicating and fails to pay over an extended period.

Policies can also include reimbursement for collection and legal costs, helping businesses recover debts faster and reduce claim exposure.

If you're already investing heavily in external debt collection after using ezyCollect, it can be worthwhile comparing those costs against the value and benefits provided through a trade credit insurance policy.

**(10:18)**

**AJ Singh**

Just to pick up on a question that's come through in the Q&A relating to the previous slide: does NCI only provide trade credit insurance related to debtors, or are there other types of business risk that can be insured as well?

**(10:43)**

**Prudence Change**

Good question.

We actually cover both sides of the transaction. We can cover debtors, but we can also cover creditors.

For example, if you're placing deposits overseas or within Australia to manufacture goods, and you're waiting for those goods to arrive, you don't want to lose that deposit if the supplier becomes insolvent.

We can provide protection for those situations as well.

We cover domestic and export transactions and can also assist with bonds and other risk protection products. There are several options available depending on the nature of the transaction and the risks involved.

**(11:26)**

Who is trade credit insurance suited to?

Realistically, if you're raising invoices, it's worth considering.

A significant portion of our client base operates within the building and construction industry. The reason is simple: insolvency levels in construction remain significantly higher than in most other industries.

However, we also work extensively with businesses in recruitment, labour hire, advertising, printing, manufacturing, electrical goods, food and beverage, steel, and many other sectors.

Any business selling goods or services on credit can potentially benefit from trade credit insurance.

One of the major advantages is access to information.

As part of the process, insurers review key debtor accounts and provide insights into their financial strength.

For example, if you're planning to grow a customer account by 20% but you're unsure whether they're financially capable of supporting that growth, we can test that with the insurance market.

The insurer's assessment can provide valuable insight into whether the customer is worthy of additional credit exposure.

As a result, trade credit insurance becomes more than protection—it becomes a business growth tool.

**(12:54)**

This slide shows our typical client breakdown.

As you can see, construction accounts for approximately 21% of our portfolio, reflecting the risks present in that industry.

However, virtually every major Australian industry is represented.

Trade credit insurance generally works well for businesses with turnover above $2 million, although we've recently introduced products for smaller businesses with lower turnover levels.

In terms of premiums, when I first entered the industry 20 years ago, minimum premiums were often around $25,000.

Today, we regularly see premiums in the range of $5,000 to $6,000.

That's largely due to increased competition among insurers and relatively low claims activity during the COVID period.

As a result, premiums are currently very competitive, which is why we're seeing significant demand for quotations and new policies.

**(14:06)**

This is the NCI Trade Credit Risk Index.

At NCI, we're strong believers in education and transparency, so we share this information with clients and prospects.

The index currently sits at 865, indicating elevated risk levels.

The figure incorporates a range of factors including claims activity, credit limit decisions, adverse information, and collection trends.

We've received 973 collections matters, which represents a significant increase compared to previous periods.

Claims activity is also elevated, with 308 claims received during the quarter and a total value of approximately $36 million.

These trends tend to follow economic cycles and broader market conditions.

**(15:11)**

One of the more interesting charts compares NCI claims activity against ASIC insolvency data.

Historically, the two move closely together.

At present, ASIC insolvencies are rising faster than claims activity, creating a noticeable gap.

Part of this may be due to the insolvencies occurring among smaller businesses where insurance exposure is lower.

However, historically, when ASIC insolvencies rise, claims activity eventually follows.

It's something we're monitoring very closely.

**(16:02)**

In 2025, trade credit insurers paid approximately $53.5 million in claims across 1,166 individual claims.

Given current trends, we expect claims activity to continue increasing.

This matters because rising insolvencies eventually influence insurance pricing and underwriting decisions.

We're working closely with insurers to ensure our clients continue receiving strong coverage and efficient claims support.

**(16:49)**

When I meet with clients, they often ask whether trade credit insurance is worthwhile.

I encourage them to consider five key questions.

First: Have you ever experienced bad debt?

Most businesses answer yes.

If you're operating on a 10% margin and lose $100,000 through bad debt, you'll need $1 million in additional sales simply to recover that loss.

When you think about it that way, you're effectively working for free just to make up the shortfall.

That's not something any business wants.

**(17:53)**

Second: What would happen if your largest customer couldn't pay?

I'm not talking about major corporations like Woolworths or Bunnings, but rather significant customers where real credit risk exists.

Would you need to cut spending? Delay growth plans? Reduce staffing?

Understanding that exposure is critical.

**(18:17)**

Third: How do you assess the creditworthiness of new customers?

Many businesses still rely heavily on trade references.

While trade references remain useful, they don't always provide a complete picture.

You should also review adverse reporting and investigate directors' histories, including any previous failed companies.

Trade credit insurance provides another layer of protection because insurers perform extensive due diligence before granting credit limits.

**(19:00)**

Fourth: How do you monitor the ongoing creditworthiness of your customers?

Many businesses assess customers when they open an account but never review them again.

The reality is that a debtor's financial position can change every day.

Most businesses aren't actively monitoring those changes.

Trade credit insurance provides ongoing monitoring of debtors through both the insurer and NCI.

That means you'll be alerted to significant changes in financial strength, insolvency events, or director-related issues.

This proactive approach allows businesses to respond before problems escalate.

**(20:04)**

Finally: What do you do when an account becomes overdue?

Many businesses tell us they send emails and make phone calls.

The question is whether they're fully utilising all available tools.

Trade credit insurance can strengthen collection conversations.

Being able to advise a debtor that the matter may ultimately involve an insurer can often encourage faster payment.

When combined with strong receivables management systems such as ezyCollect, trade credit insurance forms part of a comprehensive risk mitigation strategy.

**(20:35)**

If you're interested in understanding the potential return on investment, we have an ROI calculator available.

It can help quantify the value trade credit insurance may provide through risk reduction and business growth opportunities.

If you're interested, please scan the QR code at the end of the presentation and we'll be happy to discuss it further.

**(20:58)**

Let's walk through a simple claims example.

Assume a business suffers a $100,000 bad debt.

Without insurance, that entire amount would be lost.

With trade credit insurance, after applying the policy excess, the claimable amount may be approximately $95,000.

At 90% coverage, that results in a claim payment of around $85,500.

In most cases, payment can be made within approximately 30 days once all required documentation has been received.

That cash injection can make a significant difference to a business's ability to continue operating smoothly.
**(22:14)**

Before we move into questions, I'd like to share a case study.

As mentioned earlier, construction remains one of the largest purchasers of trade credit insurance because of the elevated insolvency rates across the industry.

This particular client was facing several challenges. Material and labour costs were increasing, application volumes were decreasing, and insolvencies and unpaid invoices were becoming more common.

All of these factors were creating significant cash flow pressure.

To address these issues, we implemented a trade credit insurance policy that provided a financial safety net and ensured claim payments could be made within a 30-day period when required.

The benefit was that the business no longer needed to worry about replacing lost revenue caused by customer insolvencies.

Just as importantly, the policy gave them greater confidence in budgeting, forecasting, and growth planning.

The client would often come to us and ask whether a particular company was worth tendering for or extending credit to.

We were able to provide insights into the creditworthiness of those businesses, allowing the client to make more informed decisions before committing resources.

This demonstrates how trade credit insurance becomes embedded in the business.

It's not simply about receiving a claim payment when something goes wrong. It's about gaining access to information that helps you grow your business, monitor debtors, improve collections, and ultimately reduce risk.

When combined with ezyCollect's automation capabilities, businesses gain a stronger overall risk management framework.

**(23:59)**

As you can see, AJ's business and ours work very closely together to strengthen risk mitigation processes and improve the management of debtor ledgers.

I'm sure many of you have questions, and hopefully you've started submitting them through the chat.

From our perspective, the market remains quite active.

We're seeing strong levels of new business applications and many organisations using trade credit insurance to support growth initiatives.

AJ, have any questions come through?

**(24:18)**

**AJ Singh**

Yes, sorry, I was on mute.

One of the biggest themes we're seeing relates to insurance premiums.

A number of attendees are asking whether premiums are likely to increase this year.

You've mentioned that pricing has come down significantly over time. Do you expect it to rise again?

Should businesses act now, or is there value in waiting a few months?

**(24:44)**

**Prudence Change**

I don't believe premiums will become cheaper.

In my view, we've already reached the bottom of the market.

Insurers have recently introduced several new products, and typically when that happens we see a temporary reduction in pricing before rates gradually increase again.

At the same time, the data we're receiving from ASIC, our own portfolio, and businesses like yours suggests rising collection activity and increasing insolvencies.

As claims rise, insurers will need to monitor profitability carefully.

Like any form of insurance, higher claims eventually lead to higher premiums.

A good comparison is flood insurance. When severe flooding occurs, premiums increase because losses increase.

Trade credit insurance behaves in much the same way.

We've enjoyed a prolonged period of very competitive pricing, but over the last six to eight months we've started seeing upward pressure.

Given the insolvency trends we're seeing, I believe premiums are likely to continue increasing over the next 12 months.

**(26:20)**

**AJ Singh**

There are two related questions.

The first is how premiums are actually calculated.

The second is what process a business must follow if they need to make a claim under the policy.

Could you talk us through both?

**(26:42)**

**Prudence Change**

Certainly.

Premiums are influenced by several factors.

The first is the quality of your credit processes.

For example, how quickly are you following up overdue accounts? Are debtors being contacted within seven days, or are collections being delayed for longer periods?

How quickly are matters escalated to collections or legal action?

These processes play a significant role in underwriting decisions.

The second factor is industry risk.

Some industries, such as construction, are considered higher risk than others.

The third factor is your claims history.

A useful comparison is motor vehicle insurance.

When renewing your car insurance, you're asked about previous accidents.

Trade credit insurance works in a similar way.

Insurers review previous claims, bad debts, and insolvency events when assessing risk.

Fortunately, because insolvency levels were relatively low during the COVID period, many businesses currently have favourable claims histories.

However, the most important consideration is usually your debtor portfolio.

Insurers examine your major debtors and assess their risk profiles.

For example, a franchise operation may present a different risk profile compared to a larger organisation supported by a parent company guarantee.

Financial statements and other credit information are reviewed extensively to determine both pricing and coverage.

**(28:09)**

**AJ Singh**

Is turnover also a factor?

Does the premium depend on sales volume or transaction values?

**(28:27)**

**Prudence Change**

Yes.

The insurer first assesses risk and determines an appropriate rate.

That rate is then applied to what we call your insurable turnover.

Insurable turnover generally excludes government entities, cash sales, intercompany transactions, and any mutually excluded debtors.

Some businesses choose not to insure certain customers, such as very large corporations where they believe the risk is negligible.

Those customers can often be excluded from the calculation, reducing insurable turnover and therefore premium costs.

**(28:44)**

In relation to claims, the process starts long before a claim actually occurs.

At policy inception, we review how accounts are opened and managed.

The policy will contain requirements around credit procedures, although in most cases these align closely with the processes businesses already follow.

Documentation such as purchase orders, invoices, account applications, and collection records may be required when lodging a claim.

The insurer wants to confirm that proper procedures were followed and that the debt is valid.

As your broker, NCI assists throughout the entire process.

Our role is to ensure the policy reflects the way your business operates and to guide you through the claims process from start to finish.

Ultimately, our objective is to make the process as smooth as possible and secure payment as quickly as possible.

**(29:56)**

**AJ Singh**

Perfect.

That addresses many of the questions we've received around policy costs.

One point worth highlighting is that businesses with strong credit processes often benefit from more favourable outcomes.

While turnover influences pricing, the quality of your processes and the risk profile of your debtors are equally important.

When you consider that a policy might cost $5,000 or $6,000 per year, a single significant customer failure could easily justify that investment.

We have time for one final question.

**(30:38)**

The question is:

If 80% to 90% of our customer base consists of high-volume but relatively low-value accounts—say under $10,000 per year—and less than 10% generate more than $100,000 annually, would that create higher volatility and therefore a higher premium?

**(31:02)**

**Prudence Change**

That's a great question and probably one that requires a deeper conversation.

For a business with that type of customer structure, there are often several different ways to design the policy.

Rather than focusing on every customer equally, we would likely evaluate which customers pose the greatest risk to the business if they failed.

One option would be a whole-of-turnover policy with a relatively low excess.

Another approach would be to focus coverage primarily on the larger accounts that represent the greatest exposure.

At NCI, we typically model several different structures so clients can compare premium costs, risk exposure, and return on investment.

The objective is to find the structure that provides the best balance between protection and affordability.

**(32:05)**

**AJ Singh**

To the person who submitted that question, please feel free to contact Prudence directly using the details provided.

Alternatively, you can speak with your ezyCollect Account Manager and we'll happily connect you.

**(32:30)**

With that, we'd like to wrap up.

Thank you everyone for joining us today and for respecting the time we set aside for the session.

Prudence, thank you again for sharing your insights and expertise.

Hopefully everyone found the session valuable and informative.

Thank you all, and we look forward to speaking with you again soon.

**(32:48)**

**Prudence Change**

Thank you very much.

Have a great day, everyone.

Thank you. Goodbye.