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Credit insurance Solutions


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Credit insurance Solutions

  1. 1. CREDIT INSURANCE Credit insurance provides protection for clients against accounts receivable losses. Companies that sell goods or services on credit terms are highly exposed to the risk of non-payment due to customer insolvency, protracted default and political risks that prevent the buyer from fulfilling its payment obligations. What is Credit Insurance?  Credit Insurance indemnifies the policyholder for the invoice value of goods delivered to a customer but unpaid due to the customer’s insolvency or default.  Policies are written on a 12-month basis, covering goods and services delivered to customers during the policy period.  Premium is charged as a rate on annual credit turnover. The policy features risk-sharing in the form of a self-insured retention. Who Buys Credit Insurance?  Any company that sells goods and services on credit terms (i.e., extends credit to customers rather than requiring payment up front) and is exposed to the risk of non-payment.  Large, medium and small commercial enterprises.  Subsidiaries or divisions of Multinational companies may buy coverage for different regions or product lines locally, or under a coordinated global program. Top 10 Reasons to Buy Credit Insurance 1. Protects against the risk of a customer default on sales made on credit terms. 2. Increase sales to new and existing customers. 3. Mitigates concentration risk when a large portion of a company’s sales are concentrated among a few customers. 4. Facilitates attractive bank financing. 5. Helps establish new foreign markets to increase export sales. 6. Supports a company’s accounts receivable management and validates credit protocols. 7. Provides an insured credit limit for a customer and monitors portfolio performance during the policy period. 8. Reduce your company’s bad debt reserve. 9. Offers a solution for directors and officers by providing a second opinion on customer credit limit decisions and monitoring the customer portfolio. 10. Provides cost-effective collection agency services. CREDIT INSURANCE Protecting your business
  2. 2. Parameter Details Basis for calculation of premium  Estimated credit turnover for coming 12 months  Excludes VAT, intercompany sales, cash sales Rate  Between 0.10% p.a to 1.5% p.a % cover  Between 85% to 95% Client retention  Between 5% to 15% Information cost  Inclusive in the rate (or in some cases paid separately based on number of debtors in the portfolio) What is covered?  Insolvency and Default  Delivery of goods and services  Business entities  Short term: 6 Months  All countries (except ‘blacklisted’) Other cover options  Binding contracts  Pre-delivery costs  Consignment What is not always covered?  Political risk cover Any ceiling?  Maximum annual liability - usually 30 times the premium paid or highest credit limit Types of credit limits  Credit limits approved by the credit insurer  Discretionary limits (decision taken in-house by the client, but still covered by the credit insurer) Claims  Protracted default  Insolvency Indemnification period  Protracted default: between 60 to 90 days  Insolvency: between 30 to 60 days Debt collection & Recovery  Done by the credit insurer  Amicable and legal ways Duration of a policy  Fixed duration period - usually 1 year Security/Collateral  Can be used as security/collateral assigned in favour of financing institutions Risk Shield's credit insurance solutions  Your duly licensed specialized credit insurance broker  Wide array of expert solutions to pre-empt risks from adversely affecting your business  Risk management is our sixth sense  Protecting our clients' businesses against black swan events  In-depth expertise in credit insurance  Agreements with leading credit insurers worldwide including Atradius and Coface  Team of professional and experienced leaders in this field  Carving the credit insurance policy according to the client's requirements  Best pricing and value-for-money deals for our clients  Negotiating the most competitive conditions including risk retention, excess, profit share, political risk cover, commercial disputes, etc Product profile Risk Shield Ltd | BRN C15133765 | Broker License BI15000104 | 27B, Riverside Street, Coromandel, Mauritius |  (230) 58 02 11 48 | For additional information, visit Partners