|Credit insurance has acquired a status that gives it a prominent position in trade relations between professionals. It has many advantages that to be fully used require an accurate management of your receivables.
There are several types of credit insurance:
The classical credit insurance.Highly developed in Europe, the classical credit insurance offers the following services:
Make sure you understand and negotiate the main terms of your contract. They involve obligations in managing your debts in order not to lose the benefit of guarantees obtained from the insurer.
Through the guarantee, the insurer gives you information on the creditworthiness of your customer. Credit insurers are often very well informed. Be sure to choose the one with the best network of information and analysis. This prevents the maximum unpaid invoices.
|Declare unpaid invoices to a credit insurer|
The credit insurance contract "excess of loss"This type of insurance is completely different from the classical credit insurance. It is usually offered to companies of substantial size (+ 20 million euros of turnover) and performing a strict management of their receivables. The insurer guarantees that the losses over a given period will not exceed the threshold specified in the contract which is the maximum amount of unpaid debts that the company can support:
This type of insurance refers to businesses that want protect themselves against the risk of being impacted by an exceptional level of bad debts.
The guaranted financial reportThis solution is offered by companies specialized in credit information and credit insurance. On your request, they will provide you with a detailed financial report about your client with a guarantee defined according to the creditworthiness evaluation of your client.
In case of unpaid invoices with this company the insurance company will reimburse you according to your contract.
This solution is interesting but quite expensive as you get warranties on your creditworthy customers and not on your insolvent customers which you still have to manage yourself.
|The main credit insurers|
|AIG: largest insurer in the world, AIG offers many differents products (insurance, collection, credit management information) adapted to each type of company.|
|Euler Hermes: recently acquired by AGF Allianz, Euler Hermes is No. 1 in many European countries and USA. The whole group accounts to 37% of the global market of the credit insurance. Euler Hermes offers credit insurance products as well as debt collection, factoring and risk assessment.|
|Coface: private credit insurer but performing missions for of the French government, Coface SCRL has ORT (No. 1 intelligence in France) and Unistrat (credit insurer on political risks). Coface is part of Natexis Banques Populaires. Initially specializing in the export market, it operates since 2000 in the domestic market. It holds 17% of the global credit insurance and also provides intelligence on companies, collection and factoring.|
|Atradius: Created after the acquisition of Gerling NCM by Swiss Re and Deutsche Bank, Atradius is present in many countries with a global market share of 27%. Atradius is present in 42 countries where it offers credit insurance and collection products.|
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