Credit Insurance protects a company's business from potential bad debts and is a cost-effective risk management tool for companies trading both in the UK and abroad.
Financial stability is secured when customers fail in their payment commitments as any losses incurred are reimbursed. Bad debts are one of the main reasons for company insolvencies, so a correctly packaged policy will remove this concern, helping businesses to grow by providing information, opinion and support.
Perkins Slade has access to the complete credit insurance market. Our specialist knowledge in credit risk placement provides flexible, tailored and correct solutions to our clients' needs.
Our professional advice and on-going service will ensure the product remains consistent with our clients' needs and requirements.
A credit insurance policy will protect companies against the unexpected or a catastrophic loss. It provides cover for goods sold and delivered or invoices raised for services rendered against the non payment of debtors, mainly due to their insolvency or because they just cannot pay or have gone away.
It will quickly replace cash lost as a result of:
Commercial Risks
- Insolvency
- Protracted default
Political Risks
A company is also protected from non payment in the event of political intervention that prevents payments being transferred to the UK from overseas. An act of any Government can prevent the completion of a contract. Such instances could be:
- Government moratorium
- Currency transfer delays
- Contract frustration
- Discharge of Debt
- Civil War
- Public Buyer Default
The policy is a risk management solution which smoothes out the effects of bad debt.
It provides ultimate balance sheet protection and greater certainty in an uncertain economy.
In discussions with banks and financiers a credit insurance policy can be used as a negotiation tool to secure enhanced facilities and lending arrangements.
The credit management function is supported by:
- Providing independent opinion of main and other customer credit levels as required
- Alternative provision of pre and post legal collection services (which are heavily discounted with some insurers)
- Access to effective debt recovery, management advice and ongoing support
Credit Insurance policies are tailored to suit each individual company depending on size and trading status. Products include:
Whole Turnover Cover
The most common form of credit insurance covers your entire customer base. This will normally incorporate a low excess with up to 90% indemnity, providing maximum scope of cover. Normally a limit of discretion is introduced, allowing you to trade with smaller customers without reference to the insurer, providing credit can be supported with satisfactory trading history or a status report from an approved agency. Many insurers now offer fixed premiums, which are inclusive of all limit charges as well as an integral collections service. Whole Turnover policies can be written on the following basis:
- Domestic
- Export incorporating Political Risk
- Domestic & Export incorporating Political Risk
Specific Account Cover
Providing cover against the failure of a single customer. Normally for the largest customer on the ledger and can provide up to 100% cover with no excess. Cover is available on an annual basis, or for the duration of the contract.
Key Account Cover
For your company's largest customers, covering 2 to 40 names on the ledger. It can provide up to 100% indemnity, however, a pre-determined excess would normally apply. Normally insolvency and protracted default are covered.
Excess of Loss / Catastrophe Cover
Specifically designed for medium and larger companies with a turnover in excess of £10 million who can afford to sustain a level of debt themselves on a 'risk sharing' basis and a pre-determined annual aggregate deductible. Cover can be on an 'all vetting' basis, or if credit control procedures are sophisticated enough, cover is justified on the basis of the company's own credit control manual and procedures. This policy can attract up to 100% indemnity, but would also be subject to a small individual excess.
Group & Global Cover
A single policy for group or multinational companies to cover all their subsidiaries or branches both in the UK and overseas. Any policy can be structured to suit the company's needs, on a whole turnover or on an excess of loss basis.
Related pages: corporate insurance - sports insurance - private clients - professional indemnity - claims
Related documents: Credit Insurance Publication
