What is a Credit Insurance?
Credit Insurance is an instrument which protects the Companies against the risk of non payment of accounts receivable, both in the National and International Markets, due to declared insolvency (bankruptcy, suspension of payments concerning creditors, or other similar situations), or for non payment of credits for more than 6 months.
How it works?
Types of Credit Insurance
Domestic Credit Insurance
Provides coverage for credit sales within the national market to legal or natural entities with commercial activities. The Insured’s domestic credit portfolio is divided into two types of clients: nominated and non nominated, based on the amount of the credit limit awarded to each one, establishing a division that will depend on the spread of the portfolio and the volume of sales established with the clients. Minor or non nominated clients are those whose credit limit is lower than the established segmentation for the client in consideration of their sales volume. The evaluation is for account of the Insured, based on guidelines defined by the Company. Nominated clients are those whose credit limit is in excess of the separation established under the policy, which will be approved, limited or rejected after an exhausted evaluation made by an InSur expert analyst.
Export Credit Insurance
Provides coverage for credit sales carried out in the international market, that is, covers the Commercial Risk of exports.
The Export Credit Insurance contributes to the increase of the exporters’ sales and incursion into new markets, as it allows them to export under a minimized and defined risk, supported by an expert credit risk evaluation. It furthermore provides an additional benefit consisting of periodic follow up of clients and of collection of possible non payments, which is more relevant abroad considering legal, cultural and language differences.
On the other hand, the Export Credit Insurance contributes to the development of competitive advantages as it allows exportations to new and existing clients under previously evaluated credit conditions, without the necessity of payment warranties, such as Letters of Credit, without time consuming dealings and resources with respect to clients that do not qualify financially for credit allowance.
Furthermore, foreign sales encounter a non payment risk due to political decisions or situations, in other words, losses caused by non payment of credits not attributable to insolvency of buyers. The Insured can therefore purchase a special additional clause covering Political Risks, including the following instances:
- War, civil war, revolution, or occupation of territory by a foreign power.
- Expropriation or confiscation, requisition of merchandise, or delay of transference of foreign currency due to lack of funds or government instructions.
- Cancellation of export or import permits.
- Unilateral cancellation of contracts by the importers government.
It is also possible to provide coverage for credit sales by companies established or domiciled out of Argentina or to affiliates of our insured, who wish to cover their exports or sales in the local market.
Evaluation and individual selection of risks
Portfolio follow up
Collection in case of loss
- Protects creditors against the risk of non payment.
- The Insured gains a “partner” who assumes the major percentage of the risk of accounts receivable.
- The Insured has back up provided by market studies and analysis of clients provided by an expert analyst.
- Allows anticipation of risk factors by InSur, based on important crossed information regarding payment behaviour risks between their Insured mainly in the domestic market.
- Has payment coverage in the majority of countries worldwide.
- Allows diminishing of provisions for uncollectible funds.
- Allows arrangement and structuring of credit policies.
- Facilitates access to financing, as the policy can be endorsed to a third party (banks, factoring), thereby obtaining bank credits with more ease and lower costs.
- Improves the Company’s financial classification.
- Facilitates penetration of new markets.
- Improves competition in the international market.