Phillip Krinker

How to Contract and/or Renew your Credit Insurance

14th May 2018 Phillip Krinker 0 Comments

How about starting 2018 with peace of mind and free of worry, such as non-payment by your customers? Still in the midst of an environment of global recession, with credit restrictions in all areas, credit management is becoming increasingly important to a company’s success.  Credit Insurance helps to protect companies against non-payment of credit sales, and it can be a great ally for growth!     

If you are interested in protecting your company’s receivables, we urge you to read   the step-by-step guidance for placement of Credit Insurance:

First of all, the broker needs to have a thorough knowledge of the Insured’ business to be able to offer an adequate solution.     

The broker’s professional staff requires to have access to some numbers concerning billing / sales, credit and debt collection procedures, and default history.   

The broker chosen should be totally independent and free to operate with the insurers that provide the best cost-benefit, and should always be focused on the best interests of the insured.     

The broker chosen should have significant premium production in the Credit Insurance portfolio, to be able to obtain the best conditions and rates, and to use its leverage to protect the interests of the insured in an eventual claim.  

The broker chosen should be prepared to help the Insured with the completion of the questionnaire, which will be the basis of our requests for quotations to the Brazilian insurance market.    

The broker chosen should have good access to the decision-makers of the nine insurers operating in the Brazilian Credit Insurance market.  Eventually, it will be necessary to have access to reinsurance markets and international Credit Insurance markets.   

The broker chosen should be thoroughly knowledgeable about the main types of Credit Insurance available in Brazil.

The broker chosen should have a team with several specialists focused on Credit Insurance, per industrial segment, knowledge on bank financial structures, capital markets, Credit Insurance claim specialists, credit and collection consultants, also technical capacity to develop credit reports on debtors, and to defend their credit limits.  

The broker chosen should use best practices, as well as the tools/methodologies developed to facilitate the insured’s choice of the best proposal (cost-benefit) offered by the insurers. Benchmarking tools are essential to facilitate the selection of the best proposal, as well as to observe the Corporate Governance of the organization.  

   

Concerning the operation of Credit Insurance

  • A typical policy covers the invoices generated during the course of a year;  
  • The premium may be charged either on the credit limits approved or on the basis of a percentage of the sales;  
  •  Claims are paid on the basis of 85% to 90% of the loss amount, after a period of 30 days, in the case of insolvency.    Time periods are longer for losses arising from protracted default and losses involving political risks.

The level of complexity and detail of this type of insurance indicates the need to obtain guidance from a broker. It is the broker who can recommend the most adequate cover.  CredRisk Seguros, as an independent broker, can assist your company in evaluating the best option for minimizing your credit risk. Request a quotation!