The many Bright Sides of Accounts Receivable Insurance

By Ron Doyle

My last series of blog posts focused on the mitigation of credit and political risk in a highly volatile and threatening world economy. While there haven’t been many improvements to provide hope that the risks facing companies around the world have reduced, today is a lovely April day, and so this post focusses on how credit insurance and better management of the accounts receivable can provide very positive benefits, even if a claim for a bad debt never occurs.

Please note: The non-claim benefits accruing from credit insurance vary depending if the client is a large company, a small company, a company exporting goods or a company providing services.

Benefit #1: It takes time and money to approve a new buyer, but obtaining a credit approval under a credit insurance policy can be faster and less expensive than you may think. With the online systems that underwriters have in place, most credit limit requests are approved within 24 hours, if they have information on the buyer. Compare this turnaround time to the time it takes a company to source the information to do a proper credit analysis and verify references on his or her own.

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Credit Insurance after the Credit Crisis: The Future is Now

By Ron Doyle

Over two years ago, it was apparent that credit insurance companies were going to face problems as they abandoned their traditional underwriting guidelines in favour of more aggressive underwriting. Past credit insurance offers were priced so low that even a modest increase in claims would result in unacceptable loss ratios. This action alone deteriorated the pool of risk, and, like in the banking community, the credit insurance industry undervalued the cost of risk.

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