Phillip Krinker

Credit Insurance: find out why you should use a specialist broker

14th May 2018 Phillip Krinker 0 Comments

Why should one choose to work with a mono-line broker, i.e., a broker specialized exclusively in Trade Credit Insurance?

Pure insurance brokers are not sufficiently qualified to adequately handle credit risks.
A specialist insurance broker is also knowledgeable in finances, bank transactions, capital markets, credit insurance, and surety insurance among other matters related to the financial segment.

Therefore, one should pay attention to three important aspects when considering the choice of a specialized trade credit insurance broker, viz.:

  1. Price

When you buy insurance, you acquire a “promise” for protection of eventual and unknown losses. Losses in the credit area can represent considerable volumes of money, and often have catastrophic consequences that can threaten the survival of an organization. Bad debts are one of the main causes of bankruptcy worldwide.

Brokers specialized in market niches usually dedicate time and resources to guarantee the quality of their services on a day-to-day basis. On average, they tend to dedicate more than 80% of their time to client service, and invest less than 20% in new clients and sales, therefore, the client gets first class service for the same price.

A typical credit insurance broker ensures that his clients are served by the following human resources:

  • a senior partner heading the account;
  • a senior account executive;
  • a junior account executive;
  • an in-house technical back-up department focused on the quality and audit of insurance policies;
  • a credit report department to defend clients’ credit limits turned down by the insurers;
  • a department specialized in credit claims.
  1. Services Offered

Credit claims are not similar to typical property and casualty claims, because Credit Insurance is a very complex type of insurance, and requires the undivided attention of specialized professionals, with a proven track record of successful credit insurance claims. A track record showing the number of claims and amounts paid is an important thermometer of the broker’s professional success. Such figures should be provided.

Credit insurance usually requires a significant investment in insurance premiums, consequently the broker is expected to provide high quality services. To this end, niche brokers use specific credit software programs and credit-related best practices, which improve client service.

Moreover, niche brokers have the internal resources not to depend exclusively on the insurers’ resources. The broker should be able to question all decisions made by the insurers, and defend the client’s point-of-view on credit limits, policy wordings, and interpretations, and have in-depth knowledge of trade credit markets, market intelligence, and what products and services are available in the markets for his clients.

  1. Trusted Advisor

The broker should act as the client’s fully trusted advisor, after all, the insured should be able to count on a broker that can offer a team approach, and places its most talented professionals at the client’s disposal.

In addition to the team members, the clients should be able to count on, at least, two senior executives, who can act as account leaders, and can be readily contacted whenever necessary. Telephone calls and e-mails must be answered the same day.

These professionals should be knowledgeable of the client’s business segments, general accounting, finance and trade finance, as well as Credit Insurance and insurance in general.   Such qualifications are not easily found in generic brokers (which operate in all lines of insurance).

There is no doubt that the world is changing, and we are facing a real business revolution, especially as a result of the introduction of artificial intelligence. The specialized broker must quickly adapt itself and introduce the new technologies into its client service procedures, to improve operational efficiencies and the overall quality of service.

Phillip Krinker has been working in the insurance industry for 40 years, and presently is CEO & President of CredRisk Seguros. CredRisk Seguros is a specialized “mono-line” trade credit insurance brokerage house. Learn more about Credit Insurance from our Definitive Guide.