Trade credit insurance
Don’t take the risk, insure your sales
Why to insure?
In 2018, the number of bankruptcies and restructuring of Polish companies amounted to 975, and the actual scale of payment bottlenecks among Polish companies is much greater. The economic situation means that even verified customers can stop paying, and the loss of receivables is for your company not only a reduction in profits, but also a risk of a serious imbalance in financial liquidity.
What does it protect against?
Trade credit insurance is a product whose economic justification boils down to the fact that a specialized entity, such as an insurance company, provides coverage for property losses resulting from a sale within a deferred payment period.
In the case of trade credit insurance, an accident may occur in two ways:
- Chronic default – occurs when a debtor fails to fulfil his obligation for a strictly specified period of time counted from the moment of the collection order or from the original payment date (depending on the content of the agreement).
- Legally established insolvency – occurs, among others, on the day the court issues a decision on the declaration of bankruptcy, the opening of accelerated composition or recovery proceedings.
How does it work?
- possibility of increasing sales in a safe way, thanks to the verification of potential business partners by the insurer
- ongoing monitoring of risk related to potential customer insolvency
- improving liquidity through the introduction of insurance procedures
- recovery of debts by specialised entities related to the insurer, both in Poland and abroad
- possibility of being linked to other financial services (e.g. factoring)
- Increasing credibility towards other financial institutions (e.g. credit insurance agreement as collateral for a working capital loan)
Possible levels of optimization of trade credit insurance agreements
Unity’s competence is guaranteed by many years of experience and extensive substantive knowledge of the Group’s employees. As brokers and managers in insurance companies, we comprehensively serviced companies that are leaders in their industries and consulted on large-scale projects. As a brokerage entity specializing in trade credit insurance, we use our knowledge of insurers and products in this area in order to provide our customers with protection tailored to their needs and to eliminate contract deficiencies that may result from the provisions of the General Insurance Terms and Conditions, while maintaining the competitiveness of negotiated offers in terms of costs.
Developed solutions and models of proceedings allow us to optimize and improve the existing and future insurance programmes in the following aspects:
- cost provisions – reduce the costs of cooperation with the Insurer during the term of the agreement
- damage provisions – affect the amount of compensation depending on different situations with the recipient
- provisions sealing the agreement – reduce the probability of a security gap and reduce the probability of a mistake in the handling of the agreement
- provisions making the agreement more flexible – they give you greater decision-making power and introduce the possibility of conducting a more individualised policy towards recipients
In addition, cooperation with our company guarantees professional assistance at various stages of the agreement handling provided by an entity that statutorily represents the interest of your company, not the insurance company:
- Conducting comprehensive trainings in the field of agreement handling
- Ongoing assistance in the handling of insurance agreements (including credit limits, interpretation of terms and conditions, annexes modifying the provisions of the agreement)
- Advisory services at the stage of debt collection and damage liquidation
- Advisory services on trade credit management in the company and assistance in the selection of additional instruments to support this process
A comprehensive solution aimed at covering all the Policyholder’s customers with protection. The policy protecting the full portfolio gives the greatest possibility to adjust parameters and records to individual needs and the specificity of the Policyholder’s activity.
Insurance that protects only a single customer or a group of selected customers (selective protection). The policy may be taken out either as a single product or as a complement to the full turnover policy (as regards limits not granted by the “primary” insurer). Due to risk selection, the rates offered by Single Risk policies are generally higher than those offered by policies covering all customers.
Excess of loss
An insurance product based on internal credit risk management procedures. The main benefit of having this type of product is a very high level of the Policyholder’s independence at its day-to-day service. The policy includes a relatively high deductible below which the Policyholder bears the risk of non-payment of receivables by his or her recipients.
Excess liability insurance
Excess liability insurance allows you to increase the limit granted by the insurer under your primary policy. Thanks to it, the current limit can be doubled. It is also possible to grant an additional limit to a recipient who has not received any limit under a primary policy.
The inclusion of political risk into the policy shall mean that compensation may be obtained in respect of a recipient whose registered office is in a country other than that of the Policyholder. The events causing damage include, among others, moratorium, transfer difficulties, war, natural disaster or withdrawal of export license.