Credit Insurance, also known as Internal or Domestic Credit Insurance, is different from Export Credit Insurance. Domestic Credit Insurance provides cover that is valid within the Brazilian territory against the risk of non-payment by debtors (natural persons or legal entities), and it is divided into 5 categories, viz.:
Commercial risks– this form of Credit Insurance covers credit operations conducted with legal entities within the country. Credit operations require personal guarantees. This is the most commonly placed form of insurance in the Brazilian market.
Breach of guarantee – this form of Credit Insurance covers consumer product sales to natural persons or legal entities. The main characteristic of this form of insurance is the existence of collaterals, where the property involved in the transaction is used as a guarantee for the insured and the insurer.
Consortium operations - covers the insured (in this case, a consortium group) against definitive net losses arising from insolvency of a member (each contemplated consortium member), i.e. after the member takes possession of an asset acquired through the consortium, and fails to pay the monthly instalments.
Mortgage loan operations – here, the objective is to cover definitive net losses that the insured may sustain in consequence of the insolvency of legal entity debtors, under loan agreements with mortgage collateral, not covered under the Housing Financial System (SFH). This cover incepts when the mortgage is registered by the debtor, provided all the requirements established in the mortgage loan agreement and policy have been met.
Lease operations – under this cover the insurer undertakes to indemnify the definitive net losses that the insured may sustain in consequence of the inability of the leaseholder/insured to pay the amounts stipulated in the commercial lease contract.
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