Is it true that insurers can reduce or remove cover on individual companies during the policy period?
Insuring trade debtors is insuring a moving target – The information on every company will change during a 12 month period and insurers will continually review all information as would uninsured companies. Insured credit limits may decrease or increase in the light of this information and any goods or services provided with credit insurance in place remain insured until those goods or services have been paid for. Where goods and services were covered, credit cover can never be taken away, only future orders will not be covered.
Will insurers only cover the biggest and most secure companies and not insure the ones I’m really concerned about?
Credit insurers won’t offer to insure companies that are seen as being poor credit risks though most policies allow some flexibility to insure even the poorest risks. Insurers typically pay out claims equal to around 50% of all premiums received and to higher levels in bad years so they do cover more than just the biggest and most secure companies. During the calendar year of 2020 statistics from the Association of British Insurers show UK credit insurers received claims of £308m – Down from £488m during the previous year.
All my customers are “Blue Chip” so why should I even consider credit insurance?
Any company can get into financial difficulty and any company can become insolvent. Some companies are better credit risks than others and the price of credit insurance reflects the risk in your debtor ledger – lower risk means lower premiums.
My credit control is excellent, and I’ve not had any bad debts in recent years so why should I consider credit insurance?
Credit insurance provides cover for risks going forwards and there is always the risk of a bad debt. With any insurance, the trick is to consider it before the event rather than after.
I have a strong balance sheet and good reserves to withstand any potential bad debt so why would credit insurance be of interest to me?
Credit insurance is a highly cost-effective way to replace a bad debt reserve and to free up cash that can be put to much better use in your business.
What’s the difference between invoice finance and credit insurance?
Invoice finance is a funding solution, which may include credit insurance (or debtor protection). This exclusive debtor protection may well be aimed at looking after the funder’s interests and not the client’s interest! It’s always worth looking at a separate credit insurance policy.
How do I make a claim under my credit insurance policy and how much will I get back?
As soon as you know your customer has become insolvent or is unable to pay you should contact The Channel Partnership and we will see you through the claims process. You will typically receive 90% of the value of the insured debt. Claims will usually be settled within 30-60 days of the claim and supporting documents being submitted depending on the value/ complexity of the claim. We have settled claims in less than 48 hours before!
Does the policy only provide cover in the event of an insolvency?
In general terms, a credit insurance policy provides cover in circumstances where your client is unable to pay. That will most often be insolvency but may also include other financial difficulties.
Can I pick and choose the customers I want to insure?
You don’t have to insure all your customers. We at The Channel Partnership, will look to provide you with exactly the cover you want – That may be individual contracts, individual customers, a selection of customers or all of your customers.
How much does Credit Insurance cost?
The price is dependent on a variety of factors, including the nature of your business, the quality of your credit management processes, and the strength of your customers. One thing for sure – No one can beat The Channel Partnership on price for the quality of cover we arrange!