Trade Credit Insurance and consumer credit A different business model Robert Nijhout Executive Director ICISA ICISA members 2 Credit Insurance is not a Financial Guarantee Conditional Direct link with delivery of goods or services ID: 770645
Download Presentation The PPT/PDF document "Trade Credit Insurance and consumer cred..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Trade Credit Insurance and consumer credit A different business model Robert Nijhout – Executive Director ICISA
ICISA members 2
Credit Insurance is not a Financial Guarantee! Conditional Direct link with delivery of goods or services
Reasons for non-payment 4 The buyer is insolvent, i.e. declared bankrupt or allowed to defer payments following a court or similar decisionThe buyer has absconded, which amounts to a type of fraudThe buyer is able to pay but cannot pay due to currency restrictions or a steep devaluation The goods never arrived and the buyer considers himself absolved from payment
Role of Trade Credit Insurer Trade credit insurers provide three main services: Risk management through ongoing assessment of present and future creditworthiness of buyers Collection services for unpaid debts Claims payment for delayed or unpaid receivables Policyholder Credit Insurer Reinsurer 2 Buyer 1 Buyer 2 Buyer n Reinsurer 1 Reinsurer n Other Goods / Services Payments Premiums Claim Payments Premiums Claim Payments Default 5
What is credit insurance? Trade credit insurance insures suppliers against the risk of non-payment of goods or services by their buyers: buyer situated in the same country as the supplier (domestic risk) buyer situated in another country (export risk) What is covered? non-payment as a result of insolvency of the buyer non-payment after an agreed number of months after due-date (protracted default) risk of non-payment following an event outside the control of the buyer or the seller (political risk cover), e.g. risk that money cannot be transferred from one country to another.
Non-payment when solvent 7 The buyer is solvent, but does not (want to) payPayment is not received for (other) unknown reasonsProtracted Default :6-month waiting period Considered equal to insolvency under the policy
Technology Trends | Digitalisation 8 “New” on-line retail platforms (e.g. Amazon and Alibaba) already account for 12% of the global trade.Digitalisation is approaching an advanced level which enables significant changes of existing business modelsSuccessful translation of B2C concepts to B2B global market places. Standardised trade finance flows allow seamless connectivity between involved parties
Technology Trends | Digitalisation 9 Fintech, Insurtech and Blockchain developments outpace regulation and legal framework connectivity with customers, brokers and 3rd partiesmeeting future customer expectations by using digital technology to interact with them working together with digital goliaths
The Trade Credit Insurance & Surety Academy Training Seminars Basic and Advanced Training SeminarsTrade Credit InsuranceSurety Bond InsuranceParticipants 15 max. Tailor-made in-houseinfo@stecis.org www.stecis.org 10
THANK YOU! 11