Credit insurance is a risk mitigation tool that protects companies from customer default on credit obligations due to commercial and/or political reasons. Commercial perils covered are customer insolvency and protracted default, i.e., slow-pay. Political risk coverage can be added to a policy if the customer is located in a foreign market. Political risks include war, riot, insurrection, currency inconvertibility, and, generally, any foreign government act which would prevent your customer from paying an accounts receivable obligation.

Credit insurance can also be purchased by financial institutions for a variety of means. Banks buy insurance to cover both bank and corporate exposures, using the insurance to transfer risk or leverage existing risk tolerances. Banks, finance companies, and factors use credit insurance to mitigate the risk on the accounts receivables they purchase from clients. Credit insurance also serves to increase the funded layer on existing corporate asset securitization facilities that are limited due to concentration issues.

IRC has extensive experience in helping companies and financial institutions develop credit insurance coverages to suit their specific needs. We believe that one of our first roles as your broker is to provide you with a sound education. There are numerous insurance companies in our industry. The insurers have different underwriting philosophies, policy structures, and niche Industry appetites so it is very important for a company to understand all of its options in order to find the policy and the insurer that best fits its business. There are several different, standard policy structures available, we also have experience in helping companies and financial institutions custom design coverage structures when their needs fall outside of those standard structures.

The links above will provide you with an introduction to credit insurance, but we encourage you to contact us at the IRC office nearest to you so that we may discuss credit insurance relative to your business. If appropriate, we will travel to your facility at your convenience to assist you in further developing a credit insurance strategy for your company.