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Update: the latest trends in credit insurance

News
07 March 2017

 

Credit insurance protects you against financial loss as a result of a default or bankruptcy of customers. For this reason, we will keep you informed on some trends and changes within the credit insurances with our partner insurers Coface, Euler Hermes and Atradius. The general trend is that insurers are increasingly looking for solutions to make the difference with other insurers: an additional value for you!

1. Credit insurances are tailored to your needs

  • In a classical approach, an entire customer portfolio is covered for one year. Today, credit insurances are tailored to your needs: insurers look specifically at what you need. For Coface and Euler Hermes it is for example possible to insure certain individual projects. You can, for example, insure for three years via a so-called “non-retractable cover”. Instead of insuring the entire customer portfolio for a maximum period of one year, like a conventional credit insurance, a specific project can now also be insured. This gives you a medium-term payment guarantee for bankruptcy, political risk or default.

2. Shorter waiting period for repayment

  • In a classic policy, the waiting period for compensation is 5 to 6 months. Insurers can now respond more quickly to the needs of businesses. Euler Hermes can already provide compensation after 2 months and with Coface, the waiting period can be shortened to three months. For SMEs and growing companies that often need cash, this is certainly very attractive.

3. More variety in the offer through alternative formulas

  • Covering individuals: there is an increasing need to grant loans to associations of co-owners (VME) in the context of the law on energy-efficient construction. All VMEs must, namely, comply with the European standard by 2020. This requires a lot of investments in energy-saving measures. At Atradius all co-owners are protected against the default of co-owners participating in a VME credit. Certain insurers such as Atradius and Coface also endeavour to insure the construction companies, within the growing market of self-building, against defaults by individuals.

  • Covering rental charges: what if the monthly rent payments from companies that rent equipment or buildings to each other are not paid? Insurers are currently actively looking for a solution for this difficult issue.

  • Guarantees and warranties: it is now possible to take out a bank guarantee through an insurer. The advantage is that the external guarantee has no impact on your existing bank credit lines. This is how you can use your bank loans to support your working capital.

4. Covering different customers with different insurers.

  • You can choose to cover the customer risk through a combination of insurers. For small customers you can for example bear the risk yourself, and you can insure large customers through the insurer. You can also choose to only insure part of the market.

ADD avoids payment problems by working with you on a smart debt management or by proactively screening new partners on their creditworthiness. Looking for a free estimate of what a credit insurance would cost you? Please contact your regular contact at ADD to comfortably do your business.

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