CREDIT INSURANCE CHAPTER 1- INTRODUCTION Definition of 'Credit Insurance' Credit insurance is a type of life insurance policy purchased by a borrower

that pays off one or more existing debts in the event of a death, disability, or in rare cases, unemployment. Credit insurance is marketed most often as a credit card feature, with the monthly cost charging a low percentage of the card's unpaid balance. Investopedia explains 'Credit Insurance' Credit insurance can be a financial lifesaver in the event of certain catastrophes. However, many credit insurance policies are overpriced relative to their benefits, as well as loaded with fine print that can make it hard to collect on. If you feel that credit insurance would bring you peace of mind, be sure to read the fine print as well as compare your quote against a standard term life insurance policy.

CHAPTER 2:OBJECTIVES OF CREDIT INSURANCE

The Corporation has set before itself the following objectives: 1. To encourage and facilitate globalization of Indias trade. 2. To assist Indian exporters in managing their credit risks by providing timely information on worthiness of the buyers, bankers and the countries. 3. To protect the Indian exporters against unforeseen losses, which may arise due to failure of the buyer, bank or problems faced by the country of the buyer by providing cost effective credit insurance covers in the form of Policy, Factoring and Investment Insurance Services comparable to similar covers available to exporters in other countries. 4. To facilitate availability of adequate bank finance to the Indian exporters by providing surety insurance covers for bankers at competitive rates. 5. To achieve improved performance in terms of profitability, financial and operational efficiency indicators

and achieve optimum return on investment. 6. To develop world class expertise in credit insurance among employees and ensure continuous innovation and achieve the highest customer satisfaction by delivering top quality service. 7. To educate the customers by continuous publicity and effective marketing.

CHAPTER3;BENEFITS OF BUYING CREDIT INSURANCE FROM ICICI

ICICI credit insurance provides policyholders with a wide range of benefits:

Protection from financial loss (client receivables) - non-payment of a debt owed by a relatively large client, or a chain of collapses resulting from market changes or political events, expose a company to a high risk that could lead to a loss of profitability (to the point of outright losses) and harm cash flow. ICICIs credit insurance is a first rate financial instrument for managing the companys risks and protecting against them. Assistance in managing a companys credit - ICICIhas a variety of information sources. As a member of a group of global credit insurance companies, ICICI has access to extensive information from credit insurance companies in other countries. These companies have information on the clients in their countries. ICICI policyholders are given access to this information, thus offering a valuable contribution to the management of the policyholders credit. As a member of the EULER HERMES group, ICICI has access to the information network of EULER HERMES, the largest credit insurance company in the world.

Meeting precautionary obligations, managing credit and hedging risks using ICICIs credit insurance is in line with the legal obligations incumbent on a companys executives. Credit insurance is a first rate financial instrument for hedging risks.

Leveraging credit insurance for financing needs - ICICI offers policyholders a joint program between ICIC and Israels large banks and non-banking financing institutions. The financing institution purchases the

debt insured by ICICI. The clearest advantages of this program are: increased financing for the policyholder, comfortable financing terms, improved financing ratios on the balance sheet (reducing the receivables line) and the policyholders continued management of collection from his clients.

Increasing revenues and profitability - credit insurance to certain countries or clients often contributes to increased sales that would not necessarily be conducted in the absence of credit insurance. Thus, for example, ICICs credit insurance to Russia, China and other countries enables exporters to increase sales to clients in those countries.

Accounting benefits - credit insurance premiums are a tax-deductible expense, whereas provisions for doubtful debts are not. Credit insurance also helps in the process for gaining recognition of revenues, as required by accounting regulations.

Improving the policyholders rating - ICICI credit insurance is taken into account by the rating companies that assess ICICI policyholders, as credit risk is among the risks that are investigated by the rating companies

CHAPTER 4 ADVANTAGES OF CREDIT INSURANCE

Credit insurance provides not only peace of mind to you, but also the following key benefits:

Catastrophic loss protection: Your receivables are one of your largest and most at-risk assets. Credit insurance protects against potential bad debt losses, thus providing a safety net. Click here to see an actual case study from our client portfolio.

Safe sales expansion: Credit insurance allows you to grow your business without worry. Whether you are trying to expand credit lines with existing customers, or extend competitive open credit terms to new accounts, using credit insurance to reduce or eliminate the risk is a great way to safely grow your business. Click here to see an actual case study from our client portfolio.

Increased Borrowing: Credit insurance can provide cost effective access to working capital that can help you grow and avoid cash flow crunches. Your credit insurance policy can help you maximize working capital availability from the receivables you pledge to your lender. Most ineligible receivables (including concentration of receivables with a few accounts and foreign receivables) can now be included in your borrowing base with your lender. Click here to see an actual case study from our client portfolio.

Credit Decision support and information on your customers: When you implement a credit insurance program with Global Commercial Credit, you are not just buying coverage on your receivables, you are getting a partner in

credit risk management whose goal is to help you avoid credit losses before they happen and back you up when they do. Credit insurance can also provide you with valuable market intelligence on the financial viability of your customers (buyers), and, in the case of buyers in foreign countries, on any trading risks peculiar to those countries. Click here to see an actual case study from our client portfolio.

Allows companies to lower their bad debt reserve:Credit insurance will allow you to lower your bad debt reserve significantly and manage writeoffs with greater certainty. By reducing the bad debt reserve on this scale, you will be able to take excess bad debt reserves back into income (by provisioning significantly less) thus improving earnings, shareholder equity and financial ratios etc. Credit Insurance premiums are tax deductible (whereas your bad debt reserve is not).

Helps avoid an unexpected significant impact on your company: For example, you would have to generate a significant amount of future sales at $0 profit (beyond your normal sales) to make up for a credit loss.

SETTLEMENTS OF CLAIMS

If you have defaulted on a loan and get a call to 'settle' it for less than the amount outstanding on the bank's books, don't accept the offer blindly. Such a 'settlement' can unsettle your credit history and impact your ability to access loans in the future.

Though you may feel that calls from the bank's recovery unit will end after the 'settlement', a valid reason for accepting the bank's offer, this comes at a price, something that most people are not aware about.

The offer for one-time settlement, called OTS in banking parlance, comes when you are unable to pay up and the interest accrued becomes more than the principal. In the offer, the lender usually demands payment of a part of the amount due, usually more than the principal.

However, the bank does not tell you that doing this is like admitting that you lack the ability to pay the entire amount, and that this will be reported to the credit bureau . The bureau, on its part, will mention the 'settlement' in your credit report, which means you will have difficulty in accessing loans in the future.

HOW IS A LOAN 'SETTLED'?

Settling a loan means paying a part of the total amount due as you are unable to pay in full. This can also be done if there is a dispute between you and the lender.

"The amount can be negotiated with the lender, but in most cases it is not less than the principal," says Arun Ramamurthy, co-founder, Credit Sudhaar, a company that helps debt-trapped people improve their creditworthiness.

After the settlement, the bank writes off the difference between the amount due and amount paid from its books and reports it as a loss.

Once the loan account has been settled, the bank would stop sending recovery agents after you.

The relationship between the bank and the customer is terminated after this. If the customer is making full payment, the account is closed in the bank's books. However, in a settlement, the bank writes off the waived amount and books losses. Most banks upload the names of customers whose loans have been written off in their blacklist database," says Manish Sinha, head, customer value management, HSBC India.

In case of dispute over the amount due or late payment fee also, the borrower can arrive at an agreement with the lender to pay a part of the dues and 'settle' the account.

"In such a case, the borrower should negotiate with the bank to clear the disputed items before paying the amount in full so that the account is not reported as 'settled'. The borrower should also seek a 'no-dues certificate' from the bank," says Amit Bhatia, director and head, assets and business banking, Deutsche Bank India.

Before settling a disputed loan, borrowers must avail of the chargeback facility under which the disputed transaction is temporarily reversed in the borrower's account till the investigation into the dispute is over.

CREDIBILITY CRISIS

While settling the loan will give you respite from recovery agents, it will damage your credit history. This is because after the paperwork, the lender will report the settlement to the credit bureau.

Though your credit report will not show any amount overdue against your name, the account status will show 'settled', which means the loan has been repaid only in part. This is enough to spoil your credit report. When you approach another bank for a loan, it is highly likely that your application will be rejected. This is because your credit report says that you have in the past failed to fully repay a loan.

"The customer may go for settlement on one or more than one credit facility with the same bank or multiple banks. However, this leaves a trail of poor credit history at the bureau. The customer will have difficulty in obtaining further credit from same or other lenders in the market," says Manish Sinha of HSBC India.

Any loan account overdue by more than 90 days is classified as a nonperforming asset. Banks usually write off loans 180-270 days after the payment date. The settlement can happen both before and after the write-off.

If a customer avails of the settlement before the write-off, the flag in the credit report is updated as "settled"; after the write-off, it is updated as "post write-off settled". Both are considered negative by banks and financial institutions.

The worst part is that people opting for settlement are not even aware of the fact that it will ruin their credit report.

"In 95% cases, the process is outsourced to agencies, and people working

there are themselves not aware that such settlements lead to negative flags in credit reports," says Ramamurthy.

As a result, a borrower would accept the bank's proposal to settle the account without asking for removal of the settled flag from the credit report.

CLAIMS PROCESS How is a life insurance insurance claim settled?

FilingaLifeInsuranceClaim

Claim settlement is one of the most important services that an insurance company can provide to its customers. Insurance companies have an obligation to settle claims promptly. You will need to fill a claim form and contact the financial advisor from whom you bought your policy. Submit all relevant documents such as original death certificate and policy bond to your insurer to support your claim. Most claims are settled by issuing a cheque within 7 days from the time they receive the documents. However, if your insurer is unable to deal with all or any part of your claim, you will be notified in writing. Types of claims Maturity Claim - On the date of maturity life insured is required to send maturity claim / discharge form and original policy bond well before maturity date to enable timely settlement. Most companies offer/issue post dated cheques and/ or make payment through ECS credit on the maturity date.

Incase of delay in settlement kindly refer to grievance redressal. Death Claim (including rider claim) - In case of death claim or rider claim the following procedure should be followed. Follow these four simple steps to file a claim:

1. Claim intimation/notification The claimant must submit the written intimation as soon as possible to enable the insurance company to initiate the claim processing. The claim intimation should consist of basic information such as policy number, name of the insured, date of death, cause of death, place of death, name of the claimant. The claimant can also get a claim intimation/notification form from the nearest local branch office of the insurance company or their insurance advisor/agent. Alternatively, some insurance companies also provide the facility of downloading the form from their website. 2. Documents required for claim processing The claimant will be required to provide a claimant's statement, original policy document, death certificate, police FIR and post mortem exam report (for accidental death), certificate and records from the treating doctor/hospital (for death due to illness) and advance discharge form for claim processing. Based on the sum at risk, cause of death and

policy duration, insurance companies may also request some additional documents.| 3. Submission of required documents for claim processing For faster claim processing, it is essential that the claimant submits complete documentation as early as possible. A life insurer will not be able to take a decision until all the requirements are complete. Once all relevant documents, records and forms have been submitted, the life insurer can take a decision about the claim. 4. Settlement of claim As per the regulation 8 of the IRDA (Policy holder's Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. However, the insurance company can set a practice of settling the claim even earlier. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation of claim.

Claim intimation In case a claim arises you should: Contact the respective life insurance branch office. Contact your insurance advisor Call the respective Customer Helpline

Claim requirements For Death Claim: Death Certificate Original Policy Bond Claim Forms issued by the insurer along with supporting documents For Accidental Disability / Critical Illness Claim: Copies of Medical Records, Test Reports, Discharge Summary, Admission Records of hospitals and Laboratories. Original Policy Bond Claim Forms along with supporting documents For Maturity Claims: Original Policy Bond Maturity Claim Form Incase of delay in settlement kindly refer to grievance redressal

DISADVANTAGES OF CREDIT INSURANCE

Certain accounts will have specific coverage limits assigned, and the limits may be far less than the amount requested by the creditor, Policies include annual and per-loss deductibles meaning that credit insurance is not first dollar loss coverage so the creditor self-insures for a portion of the risk Insurance policies often contain exclusions and limitations on coverage Often, losses under a certain dollar amount are not covered at all The insurer will likely require detailed periodic reports from the creditor about the status of customers covered by the policy and failure to comply with any of the terms of the insurance contract could invalidate the coverage Credit insurance policies will usually not pay the creditor company if the debtor asserts that the balance due is in dispute...and customers in serious financial trouble often claim the balance due is disputed The narrower the "spread" of risk being submitted to the insurer, the more difficult it will be to find coverage at an acceptable price. Credit insurance involves risk sharing, not risk transfer from the creditor to the insurance company and most insurers decline coverage on companies they consider high risk. The problem is that these are often the exact customers that the creditor wants coverage for.

CHAPTER 5:INNOVATION IN CREDIT INSURANCE

It is fair to say that when the credit crunch of 2008 hit and the recession started the credit insurers were ill prepared for the meltdown that occurred. Risk had become undervalued resulting in some underwriters needing to take quite drastic steps to reduce exposure. This in turn led to a significant loss of confidence by many of their customers, particularly in the SME sector. Credit Insurance had to change and, as a result of this, we would like to highlight some of the key improvements and innovations that are now available in Credit Insurance. Non-cancellable limits - These, although available for many years, were usually restricted to policies with a high excess and high premiums. Underwriters are now happy to consider non-cancellable limits in a wide variety of circumstances enabling companies to commit much more to the future, particularly with their larger customers. This can also help considerably where finance facilities are dependent on cover being in place. Delayed-Effect Clause - To provide insured companies with more certainty of cover the industry was challenged to find a way to deal with the apparent deterioration in the credit rating of a buyer mid policy term without just withdrawing cover on the buyer. Obviously, there could be many reasons for the deterioration and, in many cases, the situation has been resolved by the time the historic negative information comes to light. This knee jerk reaction did nothing to engender good supplier/customer relations and could play havoc with financing lines. Underwriters answer has been the delayed effect clause which maintains the credit limit cover in place for a pre-agreed period, usually 30-60 days, allowing a policyholder to resolve the issues to Underwriters satisfaction or, if this is not possible, to manage their relationship to cope with the reduction. Doubling of Credit Limits - Many underwriters now offer Top Up credit limit schemes where, in return for an additional premium amount, enhanced cover can

either automatically be agreed or, in certain circumstances, be negotiated. One underwriter even allows up to 50,000 cover where a nil credit limit has previously been provided on poorly rated customers. SME Policies offering whole ledger blind cover - There are now a whole range of new policies designed for the low turnover client. These range from simplified online offerings to policies that will offer a reduced degree of indemnity (percentage covered) for all the buyers in the ledger. Single account cover for UK or Export - This may not be new but cover on this basis was restricted and is now far more freely available from a variety of underwriters. Open Account cover for emerging markets - Do you need cover for a sale to SubSaharan Africa? For years this was one of the greatest challenges, however, main stream underwriters are now competing with the specialists in this sector. Underpinning these changes is the increased sophistication of underwriter information gathering matched by a buyers awareness that, in the order for their suppliers to finance their sales they will need credit insurance. Quarterly balance sheets are no longer a rarity and risk analysts are better trained and equipped to not only better analyse the information but also to manage their own capacity much more effectively.

Features of credit insurance Credit insurance can help you in case you cant pay your debt if you are dealing with certain types of emergencies. You have a variety of features to choose from when considering insurance. Policies vary and you can discuss details with the lender, including the premium amount, whether it can be included in your monthly loan payment, the length of your coverage and the limits on your benefits. Consider what you can afford. Dont blame your premiums for your inability to pay. Premium Starts at Just Rs. 2000/yr. No Medicals upto 75L Cover* Buy Now Individual Protection Credit life insurance pays off a portion or your total loan upon death during the term of coverage. Credit disability, accident or health insurance takes care of monthly payments over a limited amount of time in case of illness or accident. Credit involuntary loss of income insurance pays your monthly payments if you get laid off or lose your job due to no fault of your own. The disability and loss of income policies pay the creditor for a specific amount of time outlined in the policy terms, according to the National Association of Insurance Commissioners. Property and Business You can also get credit insurance policies not directly related to your ability to repay your debt. Credit property insurance protects secured loans in case of theft, accident or natural disasters that destroy personal property. Small business owners consider business or trade credit insurance that insures lines of credit and protects them from debtors who default on payments or go bankrupt.

How You Pay Payments vary on credit insurance. A singe premium method includes both the original loan amount and the insurance premium in the monthly payment. As the borrower, you would have a higher monthly loan amount when you decide to include credit insurance. Creditors might offer the monthly outstanding balance payments for credit cards, home equity loans or other debts. The credit insurance premium changes monthly, based on the debt increased over time, if you choose an open-end account. For closed-end accounts, you have a fixed amount each month for your credit insurance premium and the amount of debt does not change each month. What to Know Federal regulations protect you in buying or not buying credit insurance. A lender cant deny you credit if you dont accept optional credit insurance. However, this rule does not apply to private mortgage insurance required for most home purchasers who put less than a 20 percent downpayment on the loan. Loan companies cannot include credit insurance in your loan without your approval or knowledge, according to the Federal Trade Commission. Ask your lender if the loan includes any charges for voluntary credit insurance before you sign loan papers. If you feel pressured by the lender to buy the insurance, and do nt want it or remain undecided, seek another lender. Check for further information online with your state insurance departments web site.
Some of the disadvantages of commercial credit insurance include:

Certain accounts will have specific coverage limits assigned, and the limits may be far less than the amount requested by the creditor, Policies include annual and per-loss deductibles meaning that credit insurance is not first dollar loss coverage so the creditor self-insures for a portion of the risk

Insurance policies often contain exclusions and limitations on coverage Often, losses under a certain dollar amount are not covered at all The insurer will likely require detailed periodic reports from the creditor about the status of customers covered by the policy and failure to comply with any of the terms of the insurance contract could invalidate the coverage

Credit insurance policies will usually not pay the creditor company if the debtor asserts that the balance due is in dispute...and customers in serious financial trouble often claim the balance due is disputed

The narrower the "spread" of risk being submitted to the insurer, the more difficult it will be to find coverage at an acceptable price. Credit insurance involves risk sharing, not risk transfer from the creditor to the insurance company and most insurers decline coverage on companies they consider high risk. The problem is that these are often the exact customers that the creditor wants coverage for.

EULER HERMES AGAIN NAMED FASTEST GROWING TRADE CREDIT INSURANCE COMPANY IN GCC 25.02.2014 Global Banking and Finance Review named Euler Hermes Fastest Growing Credit Insurance Company GCC in 2014, for the second consecutive year. The awards honor companies specifically for expertise in the banking and finance industry, and recognize Euler Hermes for its continuing efforts to deliver high quality products and services.

With over 100 years of experience, Euler Hermes continues to provide customers with the services and knowledge they need to be able to trade and develop successfully, said Wanda Rich, editor of Global Banking & Finance Review. Their ongoing commitment to quality is evidenced by their increasing customer retention and growth.

Massimo Falcioni, CEO, Euler Hermes GCC, said, We are honored that Global Banking and Finance Review has conferred this award to Euler Hermes for the second year in a row.

We also particularly recognized that much of it is due to our customers renewing their trust in our services. This award is an inspiring start for 2014 and we will continue to focus on delivering tailor-made solutions to protect companies of all sizes and sectors against payment defaults.

The judging panel focused on the following criteria:

A global network with risk offices in key markets, countries and regions A comprehensive risk database and worldwide risk platform An extensive range of products tailored to meet customer needs Customer retention An increase in premium portfolio Global and local services and support Investment in ongoing education and training, delivering highly skilled and professional staff Financial standing

Euler Hermes established operations in Dubai (U.A.E.) sponsored by Alliance Insurance PSC in 2006 and in cooperation with Allianz Saudi Fransi Cooperation Insurance, a joint venture between Allianz Group and Saudi Fransi Bank, in Saudi Arabia in 2008. Euler Hermes GCC is part of the Euler Hermes Mediterranean Countries, Middle East and Africa (MMEA) region, currently employing 600 people and covering 12 countries.

Objectives
The Corporation has set before itself the following objectives: 1. To encourage and facilitate globalization of Indias trade. 2. To assist Indian exporters in managing their credit risks by providing timely information on worthiness of the buyers, bankers and the countries. 3. To protect the Indian exporters against unforeseen losses, which may arise due to failure of the buyer, bank or problems faced by the country of the buyer by providing cost effective credit insurance covers in the form of Policy, Factoring and Investment Insurance Services comparable to similar covers available to exporters in other countries. 4. To facilitate availability of adequate bank finance to the Indian exporters by providing surety insurance covers for bankers at competitive rates. 5. To achieve improved performance in terms of profitability, financial and operational efficiency indicators and achieve optimum return on investment. 6. To develop world class expertise in credit insurance among employees and ensure continuous innovation and achieve the highest customer satisfaction by delivering top quality service. 7. To educate the customers by continuous publicity and effective marketing.

CHAPTER 2 BENEFITS OF CREDIT INSURANCE

Credit insurance provides not only peace of mind to you, but also the following key benefits:

Catastrophic loss protection: Your receivables are one of your largest and most at-risk assets. Credit insurance protects against potential bad debt losses, thus providing a safety net. Click here to see an actual case study from our client portfolio. Safe sales expansion: Credit insurance allows you to grow your business without worry. Whether you are trying to expand credit lines with existing customers, or extend competitive open credit terms to new accounts, using credit insurance to reduce or eliminate the risk is a great way to safely grow your business. Click here to see an actual case study from our client portfolio. Increased Borrowing: Credit insurance can provide cost effective access to working capital that can help you grow and avoid cash flow crunches. Your credit insurance policy can help you maximize working capital availability from the receivables you pledge to your lender. Most ineligible receivables (including concentration of receivables with a few accounts and foreign receivables) can now be included in your borrowing base with your lender. Click here to see an actual case study from our client portfolio. Credit Decision support and information on your customers: When you implement a credit insurance program with Global Commercial Credit, you

are not just buying coverage on your receivables, you are getting a partner in credit risk management whose goal is to help you avoid credit losses before they happen and back you up when they do. Credit insurance can also provide you with valuable market intelligence on the financial viability of your customers (buyers), and, in the case of buyers in foreign countries, on any trading risks peculiar to those countries. Click here to see an actual case study from our client portfolio. Allows companies to lower their bad debt reserve:Credit insurance will allow you to lower your bad debt reserve significantly and manage writeoffs with greater certainty. By reducing the bad debt reserve on this scale, you will be able to take excess bad debt reserves back into income (by provisioning significantly less) thus improving earnings, shareholder equity and financial ratios etc. Credit Insurance premiums are tax deductible (whereas your bad debt reserve is not). Helps avoid an unexpected significant impact on your company: For example, you would have to generate a significant amount of future sales at $0 profit (beyond your normal sales) to make up for a credit loss.

SETTLEMENTS OF CLAIMS

If you have defaulted on a loan and get a call to 'settle' it for less than the amount outstanding on the bank's books, don't accept the offer blindly. Such a 'settlement' can unsettle your credit history and impact your ability to access loans in the future. Though you may feel that calls from the bank's recovery unit will end after the 'settlement', a valid reason for accepting the bank's offer, this comes at a price, something that most people are not aware about. The offer for one-time settlement, called OTS in banking parlance, comes when you are unable to pay up and the interest accrued becomes more than the principal. In the offer, the lender usually demands payment of a part of the amount due, usually more than the principal. However, the bank does not tell you that doing this is like admitting that you lack the ability to pay the entire amount, and that this will be reported to the credit bureau . The bureau, on its part, will mention the 'settlement' in your credit report, which means you will have difficulty in accessing loans in the future. HOW IS A LOAN 'SETTLED'?

Settling a loan means paying a part of the total amount due as you are unable to pay in full. This can also be done if there is a dispute between you and the lender. "The amount can be negotiated with the lender, but in most cases it is not less than the principal," says Arun Ramamurthy, co-founder, Credit Sudhaar, a company that helps debt-trapped people improve their creditworthiness. After the settlement, the bank writes off the difference between the amount due and amount paid from its books and reports it as a loss. Once the loan account has been settled, the bank would stop sending recovery agents after you. The relationship between the bank and the customer is terminated after this. If the customer is making full payment, the account is closed in the bank's books. However, in a settlement, the bank writes off the waived amount and books losses. Most banks upload the names of customers whose loans have been written off in their blacklist database," says Manish Sinha, head, customer value management, HSBC India. In case of dispute over the amount due or late payment fee also, the borrower can arrive at an agreement with the lender to pay a part of the dues and 'settle' the account. "In such a case, the borrower should negotiate with the bank to clear the disputed items before paying the amount in full so that the account is not reported as 'settled'. The borrower should also seek a 'no-dues certificate' from the bank," says Amit Bhatia, director and head, assets and business banking, Deutsche Bank India. Before settling a disputed loan, borrowers must avail of the chargeback facility under which the disputed transaction is temporarily reversed in the borrower's account till the investigation into the dispute is over.

CREDIBILITY CRISIS While settling the loan will give you respite from recovery agents, it will damage your credit history. This is because after the paperwork, the lender

will report the settlement to the credit bureau. Though your credit report will not show any amount overdue against your name, the account status will show 'settled', which means the loan has been repaid only in part. This is enough to spoil your credit report. When you approach another bank for a loan, it is highly likely that your application will be rejected. This is because your credit report says that you have in the past failed to fully repay a loan. "The customer may go for settlement on one or more than one credit facility with the same bank or multiple banks. However, this leaves a trail of poor credit history at the bureau. The customer will have difficulty in obtaining further credit from same or other lenders in the market," says Manish Sinha of HSBC India. Any loan account overdue by more than 90 days is classified as a nonperforming asset. Banks usually write off loans 180-270 days after the payment date. The settlement can happen both before and after the write-off. If a customer avails of the settlement before the write-off, the flag in the credit report is updated as "settled"; after the write-off, it is updated as "post write-off settled". Both are considered negative by banks and financial institutions. The worst part is that people opting for settlement are not even aware of the fact that it will ruin their credit report. "In 95% cases, the process is outsourced to agencies, and people working there are themselves not aware that such settlements lead to negative flags in credit reports," says Ramamurthy. As a result, a borrower would accept the bank's proposal to settle the account without asking for removal of the settled flag from the credit report.

Claims Process
How is a life insurance FilingaLifeInsuranceClaim insurance claim settled?

Claim settlement is one of the most important services that an

insurance company can provide to its customers. Insurance companies have an obligation to settle claims promptly. You will need to fill a claim form and contact the financial advisor from whom you bought your policy. Submit all relevant documents such as original death certificate and policy bond to your insurer to support your claim. Most claims are settled by issuing a cheque within 7 days from the time they receive the documents. However, if your insurer is unable to deal with all or any part of your claim, you will be notified in writing. Types of claims Maturity Claim - On the date of maturity life insured is required to send maturity claim / discharge form and original policy bond well before maturity date to enable timely settlement. Most companies offer/issue post dated cheques and/ or make payment through ECS credit on the maturity date. Incase of delay in settlement kindly refer to grievance redressal. Death Claim (including rider claim) - In case of death claim or rider claim the following procedure should be followed. Follow these four simple steps to file a claim:

1. Claim intimation/notification The claimant must submit the written intimation as soon as possible to enable the insurance company to initiate the claim processing. The claim intimation should consist of basic information such as policy number, name of the insured, date of death, cause of death, place of death, name of the claimant. The claimant can also get a claim intimation/notification form from the nearest local branch office of the insurance company or their insurance advisor/agent. Alternatively, some insurance companies also provide the facility of downloading the form from their website. 2. Documents required for claim processing The claimant will be required to provide a claimant's statement, original policy document, death certificate, police

FIR and post mortem exam report (for accidental death), certificate and records from the treating doctor/hospital (for death due to illness) and advance discharge form for claim processing. Based on the sum at risk, cause of death and policy duration, insurance companies may also request some additional documents.| 3. Submission of required documents for claim processing For faster claim processing, it is essential that the claimant submits complete documentation as early as possible. A life insurer will not be able to take a decision until all the requirements are complete. Once all relevant documents, records and forms have been submitted, the life insurer can take a decision about the claim. 4. Settlement of claim As per the regulation 8 of the IRDA (Policy holder's Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. However, the insurance company can set a practice of settling the claim even earlier. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation of claim. Claim intimation In case a claim arises you should: Contact the respective life insurance branch office. Contact your insurance advisor Call the respective Customer Helpline Claim requirements For Death Claim: Death Certificate Original Policy Bond Claim Forms issued by the insurer along with supporting documents

For Accidental Disability / Critical Illness Claim: Copies of Medical Records, Test Reports, Discharge Summary, Admission Records of hospitals and Laboratories. Original Policy Bond Claim Forms along with supporting documents For Maturity Claims: Original Policy Bond Maturity Claim Form Incase of delay in settlement kindly refer to grievance redressal

Innovation in Credit Insurance

December 9, 2013 | by Anna Marchant

It is fair to say that when the credit crunch of 2008 hit and the recession started the credit insurers were ill prepared for the meltdown that occurred. Risk had become undervalued resulting in some underwriters needing to take quite drastic steps to reduce exposure. This in turn led to a significant loss of confidence by many of their customers, particularly in the SME sector. Credit Insurance had to change and, as a result of this, we would like to highlight some of the key improvements and innovations that are now available in Credit Insurance. Non-cancellable limits - These, although available for many years, were usually restricted to policies with a high excess and high premiums. Underwriters are now happy to consider non-cancellable limits in a wide variety of circumstances enabling companies to commit much more to the future, particularly with their larger customers. This can also help considerably where finance facilities are dependent on cover being in place. Delayed-Effect Clause - To provide insured companies with more certainty of cover the industry was challenged to find a way to deal with the apparent deterioration in the credit rating of a buyer mid policy term without just withdrawing cover on the buyer. Obviously, there could be many reasons for the deterioration and, in many cases, the situation has been resolved by the time the historic negative information comes to light. This knee jerk reaction did nothing to engender good supplier/customer relations and could play havoc with financing lines. Underwriters answer has been the delayed effect clause which maintains the credit limit cover in place for a pre-agreed period, usually 30-60 days, allowing a policyholder to resolve the issues to Underwriters satisfaction or, if this is not possible, to manage their relationship to cope with the reduction. Doubling of Credit Limits - Many underwriters now offer Top Up credit limit schemes where, in return for an additional premium amount, enhanced cover can either automatically be agreed or, in certain circumstances, be negotiated. One underwriter even allows up to 50,000 cover where a nil credit limit has previously been provided on poorly rated customers.

SME Policies offering whole ledger blind cover - There are now a whole range of new policies designed for the low turnover client. These range from simplified on-line offerings to policies that will offer a reduced degree of indemnity (percentage covered) for all the buyers in the ledger. Single account cover for UK or Export - This may not be new but cover on this basis was restricted and is now far more freely available from a variety of underwriters. Open Account cover for emerging markets - Do you need cover for a sale to Sub-Saharan Africa? For years this was one of the greatest challenges, however, main stream underwriters are now competing with the specialists in this sector. Underpinning these changes is the increased sophistication of underwriter information gathering matched by a buyers awareness that, in the order for their suppliers to finance their sales they will need credit insurance. Quarterly balance sheets are no longer a rarity and risk analysts are better trained and equipped to not only better analyse the information but also to manage their own capacity much more effectively.

BENEFITS OF BUYING CREDIT INSURANCE FROM ICIC ICIC credit insurance provides policyholders with a wide range of benefits:

Protection from financial loss (client receivables) - non-payment of a debt owed by a relatively large client, or a chain of collapses resulting from market changes or political events, expose a company to a high risk that could lead to a loss of profitability (to the point of outright losses) and harm cash flow. ICICs credit insurance is a first rate financial instrument for managing the companys risks and protecting against them. Assistance in managing a companys credit - ICIC has a variety of information sources. As a member of a group of global credit insurance companies, ICIC has access to extensive information from credit insurance companies in other countries. These companies have information on the clients in their countries. ICIC policyholders are given access to this information, thus offering a valuable contribution to the management of the policyholders credit. As a member of the EULER HERMES group, ICIC has access to the information network of EULER HERMES, the largest credit insurance company in the world. Meeting precautionary obligations, managing credit and hedging risks using ICICs credit insurance is in line with the legal obligations incumbent on a companys executives. Credit insurance is a first rate financial instrument for hedging risks. Leveraging credit insurance for financing needs - ICIC offers policyholders a joint program between ICIC and Israels large banks and non-banking financing institutions. The financing institution purchases the debt insured by ICIC. The clearest advantages of this program are: increased financing for the policyholder, comfortable financing terms, improved financing ratios on the balance sheet (reducing the receivables line) and the policyholders continued management of collection from his clients.

Increasing revenues and profitability - credit insurance to certain countries or clients often contributes to increased sales that would not necessarily be conducted in the absence of credit insurance. Thus, for example, ICICs credit insurance to Russia, China and other countries enables exporters to increase sales to clients in those countries. Accounting benefits - credit insurance premiums are a tax-deductible expense, whereas provisions for doubtful debts are not. Credit insurance also helps in the process for gaining recognition of revenues, as required by accounting regulations. Improving the policyholders rating - ICIC credit insurance is taken into account by the rating companies that assess ICIC policyholders, as credit risk is among the risks that are investigated by the rating companies.

CREDIT INSURANCE AFTER THE CREDIT CRISIS: THE FUTURE IS NOW

August 18, 2009
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. Then, once losses materialized, underwriters reacted urgently to protect their positions. Many cancelled large numbers of approved credit limits, increased prices, and applied policy conditions more rigorously when reviewing claims. Such actions created an adverse perception of the value of credit insurance by many companies affected.

Yet credit insurance remains a valuable tool in managing risk. Credit insurance allows companies to transfer certain risks to underwriters, and, by improving financing options and supporting increased sales, credit insurance solutions are evolving to follow more traditional insurance concepts. Examples: 1. Credit insurance coverage should only be used for unforeseen commercial and political risks that could causeabnormally high write-offs against accounts receivable. Routine write-offs are a cost of doing business and they are within the control of the company not necessary to insure with credit insurance policies. 2. By necessity, companies seeking credit insurance may have to include new risk mitigation strategies into credit practices. It is now apparent that underwriters require more financial information (from policy holders and their buyers) prior to approving larger exposures, particularly in industries with a high aggregation of risk. 3. Many current policyholders and potential clients are changing their expectations of the pricing of credit insurance and the amount of risk they are expected to retain. In the last 5 years, average premium rates have dropped considerably, in the area of 50%, but this situation is not sustainable. Premium rates and deductibles are increasing to levels that allow credit insurance policies to be both effective and still provide good value. 4. Most insurers are modifying their products to meet policyholders expectations of reliable coverage at a reasonable cost. More policyholders are seeking non-cancelable credit limits or policies with definite criteria for allowing underwriters to cancel or reduce credits limits. If coverage on a loss is denied, policyholders want easily accessible recourse to arbitration, short of taking an underwriter to court. 5. Brokers and direct sales agents are providing superior customer service. A policyholder needs to understand each word in an agreement and how it will be interpreted in a claims situation. A credit insurance policy needs to be structured to provide optimum coverage at a minimum cost, which requires earlier and more detailed analysis by brokers. Credit insurance for accounts receivable continues to be an excellent risk management tool, and over the next two years, it will continue to improve and change. Specialist credit insurance brokers are also trusted advisors, and the trend for companies to rely on and work in partnership with insurance brokers will continue. (Ron Doyle is a founder of Millennium CreditRisk Management credit and political risk insurance specialists www.mcm.ca. ICBA is the worlds largest team of independently-owned, specialist trade

credit insurance brokerages. Partners combine local service with global coordination to provide credit and political risk insurance solutions for multinational companies.)

Benefits at RCL Royal Caribbean Cruises Ltd. believes that great vacations begin with great employees and we are pleased to offer a robust menu of rewards and benefits. These benefits include cruising privileges aboard our ships around the world, paid time off, health benefits, wellness plans and several retirement plans. Cruising Privileges Take a load off and relax! After spending six months with the Company, all part time and full time employees and their immediate families become eligible for exclusive cruising discount privileges based on availability.

Insurance We offer a great selection of insurance options to keep you and your family healthy. The following is included in your benefits package:

Medical Dental Vision Group Life Short and Long Term Disability Travel Accident Healthcare and Dependent Care Spending Acco

Wellness & Work Life Balance RCL provides numerous options to improve your overall health and wellness. Fitness facilities with unique and challenging classes, financial workshops, and even online informational boards and forums are available to keep you informed, and help you achieve your personal goals.

Personal Health On-site Wellness Center On-site Day Care (Port of Miami Campus) On-site Medical Clinic (Port of Miami Campus) Financial Seminars Employee Assistance Program Tuition Reimbursement Adoption Assistance Program

Financial & Retirement Plans When you set sail with RCL, we help you realize your financial dreams. We provide several retirement benefits, such as non-contributory pension plans and 401(k) plans, along with an employee stock purchase plan, which are designed to help you reach your financial goals. Paid Time Off As one of the leading providers in the vacation and hospitality industry, we understand the importance of making time to rest and relax. We also understand

when life happens, sickness and emergencies are unavoidable. RCL provides ample amounts of paid personal, vacation, and holiday pay, so when life catches up to you, you dont fall behind. Additional awards are:

On-site Cafeteria Credit Union Employee Discount Program Aflac and Seniority Matters Adoption Assistance Recognition Programs Legal Insurance And many more

The Benefits are Endless!

FEATURES OF CREDIT INSURANCE Credit insurance can help you in case you cant pay your debt if you are dealing with certain types of emergencies. You have a variety of features to choose from when considering insurance. Policies vary and you can discuss details with the lender, including the premium amount, whether it can be included in your monthly loan payment, the length of your coverage and the limits on your benefits. Consider what you can afford. Dont blame your premiums for your inability to pay. Enjoy 10X Rewards, Fuel Savings, 10,000 Air Miles & More. Apply now!

Individual Protection Credit life insurance pays off a portion or your total loan upon death during the term of coverage. Credit disability, accident or health insurance takes care of monthly payments over a limited amount of time in case of illness or accident. Credit involuntary loss of income insurance pays your monthly payments if you get laid off or lose your job due to no fault of your own. The disability and loss of income policies pay the creditor for a specific amount of time outlined in the policy terms, according to the National Association of Insurance Commissioners. Property and Business You can also get credit insurance policies not directly related to your ability to repay your debt. Credit property insurance protects secured loans in case of theft, accident or natural disasters that destroy personal property. Small business owners consider business or trade credit insurance that insures lines of credit and protects them from debtors who default on payments or go bankrupt. How You Pay Payments vary on credit insurance. A singe premium method includes both the original loan amount and the insurance premium in the monthly payment. As the borrower, you would have a higher monthly loan amount when you decide to include credit insurance. Creditors might offer the monthly outstanding balance payments for credit cards, home equity loans or other debts. The credit insurance premium changes monthly, based on the debt increased over time, if you choose an open-end account. For closed-end accounts, you have a fixed amount each month for your credit insurance premium and the amount of debt does not change each month.

CHAPTER 3 Future Management of the Credit Risk Even the most rigorous credit manage-ment cannot prevent occasional bad debts.With the prospect of a tighteninginsurance marketplace, more than ever an emphasis on risk management control in credit is vital.Whilst NCI was initially established18 years ago as a specialist insurance broker, we realize that our business is actually about protecting the profitability of our clients. Credit insurance is still the ultimate safeguard against bad debts but better business practices in trade credit management also help to improve profitability on a day-today basis. Over the years we have developed a complete range of trade credit services intended to provide a holistic approach to support each clients future

management of such an important asset. Apart from credit insurance, there are a range of risk management services available from the simple provision of information prepared on an up-to-date and fresh basis through to independent credit limit analysis,debtor monitoring and pro-active risk mitigation advice. Specialist services in the area of collection support and recruitment and personnel are also available, providing a broad range of credit related services but all interactively supporting the protection of each clients profitability. The future management of credit will, in our view, become more reliant on active management in all areas of a business once the sale has been made.There is an increasing pressure on margins and efficiencies in business and the future of an active credit team will have less and less to do with the traditional functionality of an in-house credit department.

CHAPTE R 4 Benefits of buying credit insurance in scb Features 1. Cheque-On-Call Plus At Standard Chartered, we give you the financial flexibility you need. With Standard Chartered Cheque-on-Call Plus, you can have more financial flexibility as you realise your goals. Enjoy affordable interest rates and a repayment plan of up to 60 months.

With Cheque-On-Call Plus, you will enjoy the following benefits:

Low interest rate - 9.88% Choose from 6 plans - 9 months, 12 months, 24 months, 36 months, 48 months or 60 months No cancellation fee More financial flexibility

2. Balance Transfer Your chance to enjoy maximum savings. Transfer the outstanding balance on your credit card or charge card with other banks to your Standard Chartered credit card. Then stretch your repayments for as long as you can. Take your time to enjoy the benefits!

Save more with fixed monthly instalments Greater convenience and control when you consolidate your balances Enjoy dining discounts nationwide with your Standard Chartered credit card

3. Balance Transfer PLUS Your chance to enjoy maximum savings. Transfer the outstanding balance on your credit card or charge card with other banks to your Standard Chartered credit card. Then stretch your repayments for as long as you can. Take your time to enjoy the benefits!

Save more with fixed monthly instalments up to 36 months tenure Enjoy early settlement with rebates at any time Greater convenience and control when you consolidate your balances Enjoy dining discounts nationwide with your Standard Chartered Credit card

4. FlexiPay Wouldn't it be nice to have more financial flexibility whenever you need it? Want to own the latest gadgets? What about the times when your car needs servicing? Or when you need to pay medical expenses? FlexiPay gives you the option to convert any of your Standard Chartered Credit Card purchase(s) to 12 month instalments at a low interest rate of 4.99%*p.a.

CHAPTER 5
Insurance market sees 25 percent growth The insurance market grew by more than 25 percent in the first nine months, according to the Association of Vietnamese Insurers. The non-life insurance sector reported growth of 25.97 percent in premium income, which topped 12.417 trillion VND (621 million USD).

Motor vehicles represented the largest segment, with 3.885 trillion VND, up almost a fifth over the same period in 2009. Health and personal accident insurance followed with almost 1.7 trillion VND, up 28.74 percent, ahead of construction and installation with 1.43 trillion VND (28.3 percent). Though still a small segment with 6.1 billion VND, agricultural insurance achieved the highest growth of 520 percent. Credit insurance was 148 percent up at 14 billion VND, while fire and explosion cover rose 77 percent to 254 billion VND. Bao Viet was the largest player with premium incomes of more than 3 trillion VND, followed by PetroVietnam Insurance Company with 2.85 trillion VND, and Bao Minh with over 1.5 trillion VND. Smaller companies achieved higher growth rates MSIG's premium income rose by 297 percent, Groupama's by 205 percent, and ACE's by 153 percent. Claim settlements were worth 4.248 trillion VND during the period. The association said there will be a sharp rise in the fourth quarter due to the recent floods in the central region. Thai Van Cach, deputy general director of the Vien Dong Assurance Company, said preliminary estimates put the damage caused by two storms in October in the provinces of Nghe An, Ha Tinh, Quang Binh, and Quang Tri at 8.5 trillion VND. They killed 165 people and injured 117 others, damaged around 440 houses, and killed livestock. "Only half of the 165 people killed were insured, meaning a total payout of around 3 billion VND. Auto losses were less than 5 billion VND and most of the damaged roads were not insured," he said. Clearly, insurance companies have yet to tap the market's potential. Cach said if insurance companies manage to persuade importers to switch to FOB (free on board) mode from the current CIF (cost, insurance and freight), Vitenamese insurers will benefit since under the current practice the exporters pay the insurance in their home country.

The life insurance sector reported premium incomes of 9.767 trillion VND, a 25 percent rise year on year. Prudential topped the industry with more than 3.8 trillion VND , up 12.9 percent. New contracts accounted for 2.478 trillion VND of the premiums paid, a 35 percent increase. Bao Viet collected 2.944 trillion VND (27.4 percent) and Manulife was in third place with over 1 trillion VND (53.4 percent). The companies collected premiums on 4.143 million contracts, 4 percent higher than a year earlier.

CHAPTER 6 CASE STUDY FORGEWELD

While many SMEs recognise the benefit of protecting their business against the risk of not getting paid, some think that existing credit insurance policies are costly, confusing and impractical for a smaller business that may have little in the way of credit management support. Although some see the risk of not getting paid as being a part of everyday business life, other companies such as Midlands-based Forgeweld Ltd are being more proactive. Indeed Forgeweld is one of the very first to take advantage of a new off the shelf trade credit insurance policy from Euler Hermes called Simplicity a product designed to bring peace of mind within minutes to small firms with challenging customers. And as far as Forgewelds Managing Director Kevin Carter is concerned, the product is certainly living up to its name. Forgeweld has been supplying specialist welding consumables, equipment and associated products for almost 30 years. While it works with a handful of leading names on major contracts, the vast majority of its business comes from larger numbers of smaller customers as Kevin explains: We have many customers, who owe 1,000 here, or 3,000 there, and it only takes a handful of these debts to go bad and you can end up losing quite a bit of money, he says. This makes Kevin nervous about taking on new business: When there is that doubt hanging over you about whether you will be paid, it can change how you feel about taking on a new account, he continues. We had a customer recently who we had been working with for 18 months on a pro-forma basis, who asked me for credit. The following week they went bust. This is the difficult environment we currently work in; customers with whom you have an established track record can fail without warning, and we expect many more to fail as we emerge from the recession.

Kevin is no stranger to the challenge of insuring against bad debts. More than 10 years ago he lost a substantial sum following the collapse of a major engineering and forging group and sought credit insurance. But with improving fortunes, and his losses under control, the cost of the premium seemed expensive compared to the risk. Having traded without credit insurance for some time, but with the risk now increasing, he was reluctant to return to what he had before. Then he learned about Simplicity. It is a policy that perfectly suits my business, he says. The premiums are affordable and policy matches my risk. Whats more, I dont have to manage the policy as Euler Hermes effectively does it all for me. Simplicity offers simple pricing, simple administration and a simple and fast claims process on all debts over 200 so that if a payment remains outstanding, the potential impact on a companys cashflow is minimised. It is also the first product if its kind to remove the necessity for credit limits. Businesses are covered in the event of non-payment or insolvency of their customer for a minimum of 60 percent of the unpaid debt value to an agreed maximum limit (4,000 per claim) as standard. This can be increased to 90 percent with a higher maximum (16,000) if the policyholder applies for a Euler Hermes grade, (via Euler Hermes online platform) and their customer is assessed as an acceptable risk. Simplicity requires no more administration than a motor or home contents policy, but provides a level of protection that helps business owners sleep more comfortably at night. Kevin concurs: Simplicity is simple to understand, simple to implement and simple to use, he says. It gives me the confidence to grow my existing customers and take on new business knowing that even in the very worst case scenario, I will get a large percentage of my money back. Euler does everything: they monitor my accounts and notify me of any significant changes in risk so that I can make better-informed decisions about the way we do business. When I get home now in the evenings, I no longer worry about accounts that might have previously made me nervous. Simplicity gives me total peace of mind.

FUNBOX MEDIA LTD

Serial entrepreneur Barry Hatch is no stranger to the challenges of late payment and the impact that a slow, or non-paying customer can have on the companys cashflow. Working in the home entertainments sector, he has also experienced at first hand the risk that comes from the potential collapse of major High Street names such as HMV, Blockbuster and GAME etc, and the tremors that are inevitably felt along the supply chain. He recognises too that sometimes the biggest risk can come from businesses with which he has previously enjoyed a long and successful relationship where it is all too easy to think these guys will never go. Perhaps not surprisingly, given his knowledge and experience, Barry takes steps to protect his company Funbox Media Limited from some of the uncertainties of business by using trade credit insurance from Euler Hermes. Again, not surprisingly he has good reason for congratulating himself on the decision to credit insure following a recent issue with a large customer which might have had even more serious and far reaching consequences. Funbox, which Barry founded in 2010, publishes computer and video games, selling primarily through distribution. To publish a new title takes considerable time and expertise, often requiring the need to develop the product further and gain the necessary approvals and licences for distribution around the world. Having products such as The Cube on Wii makes Funbox an attractive partner, with a game that people want to buy. Selling products that are in high demand is only one half of the challenge; making sure you get paid for the products you deliver is perhaps the greater. So when a long-standing customer of Funbox began stonewalling on payments, Barry was pleased that he had the comfort of being credit insured: We had looked at credit insurance previously, but originally decided against it on the grounds of cost and the established relationships we had with our customers, he explains. But after a series of hits to our bottom line as a result of companies going to the wall, we decided to re-think our strategy. He was pleased that he did so: The benefit of credit insurance is that it not only protects you if a company suddenly becomes insolvent, but it also covers you

against protracted default. In our case our customer who was experiencing its own cashflow difficulties having been a supplier to both GAME and HMV was withholding our payments. Although we had agreed a repayment plan, it found it was unable to honour those plans and so we were obliged to make a claim. This is where the true value of credit insurance has come into its own: Euler Hermes was extremely supportive throughout the claims process, he continues, and although it wasnt entirely painless, it could have been substantially more painful! In the event, a substantial part of the claim was paid in full, and that has enabled me to keep the cash flowing. Put another way, without the claim being paid my business would have been seriously affected. Although the customer in question continues to trade, Funbox chooses to source its customers elsewhere, and always with Euler Hermes support: The policy is easy to manage and we can apply for limits online, Barry says. In the vast majority of cases, the limits we apply for are granted, and if they are not then I simply look to do business with that customer on different terms. Because of the recent downturn, customers understand that payment upfront is sometimes necessary, and we often negotiate along these lines. When we have a product that people want, and the distributors want to sell, we will always find ways of doing business together, he concludes. Whenever I can, however, I prefer to have that business credit insured.

Understanding the Credit Insurance and its Benefits

Credit insurance, also known as payment protection insurance, credit protection insurance or loan repayment insurance, enables individuals to insure their repayment of debt if the borrower is unable to pay due to circumstances like borrowers illness or sudden death or his inability to repay because he lost his job. You can buy credit insurance to insure all types of loans, such as home mortgage loan, car loans and loans from finance companies. Moreover, credit insurance policy also provides protection to your account receivables against the bad debts and allows you to give more credit to customers and hence, increase your sales. Credit insurance ensures that your business will be paid for the goods and services that were delivered to your customers. Exact damage coverage depends on the terms and conditions mentioned in the credit insurance policy. Always seek guidance of Your Personal Financial Mentor when you are choosing the credit insurance plan in order to decide which package will be favorable according to your requirements. Every credit insurance policy is customized according to the needs of an individual or his business. Many companies cover the majority of their business in a credit insurance policy, including domestic and export accounts. If your company has operations in different countries, you can choose multi-country policies as well. There are several benefits of credit insurance and some of them are explained below: Loss protection Account receivables in any business are one of the riskiest assets. Credit insurance provides protection against the risk of potential bad debt losses and hence, provides safety for your business. Increase the borrowing limit It also provides access to the working capital that can help you avoid cash flow problems and grow your financial prospects. Credit insurance policy increases the working capital availability from the receivables you provide as a security to your lender. Therefore, many ineligible receivables, such as foreign receivable and receivables with few accounts can now be added in your borrowing base to increase the borrowing capacity.

Safely expand the sale Credit insurance allows you to expand your sales without any worry. If you want to expand the credit lines with your current customers, or you want to expand your business operations in a new market, credit insurance provides you a safe passage to grow your business to new heights. Enable low bad debt reserves Credit insurance allows you to reduce your bad debt reserves and manage the write-offs with confidence. Therefore, you can improve your profits, financial ratios and shareholder equity by taking the excess reserves back into the income. It strengthens your position in the market and increases the value of your share. Ensure strong controls on credit risk management Credit insurance companies track millions of companies around the world and hence, provide you the necessary information in order to make sure that you are selling to customers with strong credit standing in the market. It allows you to make a better decision when you are planning to extend credit.