Frequently Asked Questions
- ACCOUNTS RECEIVABLE INSURANCE
- CREDIT ENHANCEMENT
- CREDIT INSURANCE
Exim Applicants
FAQ's
Credit insurance is a product designed to protect what is most likely your company's largest asset, its accounts receivable. It covers credit losses caused by insolvency (bankruptcy), slow payment and, in the case of international transactions, it covers political risk as well.
No, actually policies have been sold in the United States for over 100 years. All the carriers that issue these policies are well established companies that carry at least an "A" rating by A.M. Best.
No. Unlike factors insurance companies are not lenders. They only protect against non-payment of your buyers. As a result the cost is a fraction of what factors charge.
Credit insurance assists companies in several ways. It protects against the infrequent, but highly severe, catastrophic credit loss (i.e. K-Mart, Enron). It can also enhance a company's financing relationship. Insured receivables, especially international receivables, make much stronger collateral than non-insured receivables. By making these receivables eligible, it may increase your borrowing base. Most importantly it enables a business to expand both its sales as well as profits. Transferring the risk of non-payment allows companies to sell more to both existing customers as well as to new clients. In many cases the additional profits generated by the policy more than pays the premium.
Not necessarily. Depending on what you would like to accomplish you can insure only your domestic sales, only your export sales or both. You can also carve out an exclusive segment of your receivable portfolio, for example, the ten largest customers or all companies that owe more than $25,000.
While sales expansion is an important benefit of this policy, so is loss prevention. Buyers to be insured are assigned specific credit limits depending on your requirements as well as the financial strength of the customer. In addition these accounts are continually monitored for any change in their financial condition.
No. Credit insurance is transparent to your buyers. You continue to do the invoicing and collections. There is no notification to your clients unless you choose to let them know. The receivables are not assigned nor are any liens or UCC filings necessary.
Yes, we can request a specific endorsement to exclude sales from a policy.
Yes, we can write a policy to just insure your foreign sales.
Yes, we have frequent discussions with financing professionals to explain the policies, and their respective coverage benefits.
Credit insurance provides an assurance of payment that asset based lenders can advance against. Typically most national banks will provide a higher advance rate against both foreign and domestic receivables that are insured.
The application may take 45 minutes to complete and then we can provide a non-binding indication (quotation) from several insurance carriers within a 2-3 week time frame. We will provide an executive two-page summary that will outline premium, deductible, co-insurance, and policy features as well as attach all the formal indications.
No. Credit insurance policies are typically Inland Marine controlled contracts. This means that whether you go direct and try to figure this out on your own or go through a qualified broker the rates are the same. The value a broker provides is with the evaluation, quotation and implementation of the program. We structure the contract in your best interests - not the carrier's. Also, we assist in mandatory reporting requirements and a pre-claims review prior to claim submission.