demystifying trade credit insurance · 2. the benefits of trade credit insurance 3. the importance...
TRANSCRIPT
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DEMYSTIFYING TRADE CREDIT INSURANCE
Christian Hoy
James Earley
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AGENDA
Background to CMR
Learning Objectives
High profile company failures in 2018
Definition of Trade Credit Insurance
The importance of Trade Credit Insurance
Uncertainty
How does Trade Credit Insurance work?
Policy Types
BIBA Relationship Managers
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CMR INSURANCE SERVICES
29 years in business
Appointed Representative of Atradius
Only provide Trade Credit Insurance
Commercial lines - B2B
BIBA Scheme Provider since January 2018
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LEARNING OBJECTIVES
1. Understanding Trade Credit Insurance
2. The benefits of Trade Credit Insurance
3. The importance of Trade Credit Insurance
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HIGH PROFILE COMPANY FAILURES
Carillion Claire’s Accessories
Toys ‘R’ Us
Maplin House of Fraser
Patisserie Valerie
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STATISTICS
• Insolvencies in 2018 were up 10%
• Equating to 44 a day
• 69% of businesses have been affected by bad debt *
• 37% of businesses have been a victim of fraud *
• 42% of businesses feel the economy is the biggest challenge they’ll face in 2019 *
* Figures from Business Census 2019 - Creditsafe
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Order made
WHAT IS TRADE CREDIT INSURANCE?
Trade Credit Insurance protects companies from the risk of non-payment from their business customers that they have extended credit to.
Payment made upon due date
Delivery/Service provided
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WHAT IS TRADE CREDIT INSURANCE?
Order made
Delivery/Service provided
Trade Credit Insurance Contract
Buyer Insolvent
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OFTEN REFERRED TO AS…
Bad debt protection
Bad debt insurance
Debtor insurance
Sales invoice insurance
Debtor protection
Sales invoice protection
Credit insurance
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THE IMPORTANCE OF TRADE CREDIT INSURANCE
Protection Replaces money that is lost in the event of a bad debt
Profitability Trade credit insurance promotes improved profitability by
allowing the increase of exposure to both new and old customers, whilst staying protected.
Peace of Mind Running a business can be stressful as there is so much to think
about. Knowing that one of the largest assets of a balance sheet is protected can help reduce that stress.
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FURTHER BENEFITS OF TRADE CREDIT INSURANCE
Growth Businesses can expand as trade credit insurance enables them to
deal with new clients and increase credit lines to existing ones
Information It provides greater access to customer information. This up to
date information allows business owners to make informed decisions
Cash-flow A policy complements and works with existing credit control
procedures to improve days sales outstanding Improves access to finance
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UNCERTAINTY
Brexit
US Isolationist
policies
US/China potential trade war
The general economic outlook
Honda closing UK
plant
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WHICH WAY WOULD YOU CHOOSE?
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Quick Quote
WHAT INFORMATION IS REQUIRED?
Trade sector
Bad debt history
Turnover
Export/Domestic/Combined
Number of buyers
Policy Price
Food Wholesaler
£0
£1,000,000
25
£3,500 per annum
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THE PROCESS
Information Type of policy Non-binding indication of
terms
Review of key buyers
Meeting with the client
Training and signing
Ongoing support from a dedicated administrator
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CREDIT LIMITS AND UNDERWRITING
Discretionary Limit
Underwriter
Companies House
Policyholders
Credit Reference Agencies
Directly from Buyer
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CLAIMS
Notify CMR Copy Orders
Copy Invoices Proof of Delivery
Insolvency
Confirmation of Debt with IP
Justification of Discretionary
Limit
Claims Forms Pre-Claims
Assessment
Submission of Claim
Claim Paid
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POLICY TYPES
Single Risk Whole Turnover
Variable Monthly
declaration
Fixed Price Annual Estimated
T/O
Multicurrency
Combined Export Only
UK only
Covers up to 4 buyers Generally more restrictive
Tailored to each customers’ need
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STRUCTURE
Policy Schedule
• 12 Month Policy Period • Fixed Price • Insolvency, Protracted Default
and Political Risk • Goods or Services • Work in Progress • 90% Indemnity
Policy Schedule
• Deductible • 45 day Maximum Extension
Period • Maximum Terms of Payment • Insurer’s Maximum Liability • Maximum Credit Limit • Discretionary Limit
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BIBA RELATIONSHIP MANAGERS
Phil Hendy (North) Phil is our BRM in the north and is willing to meet with any member looking to add trade credit to their offering. Phil has worked in the credit insurance industry for 20 years and is excited to meet plenty of brokers looking to understand trade credit insurance further.
Nigel Simkins (South) Nigel has always maintained a long relationship with CMR and he is well aware that trade credit insurance goes hand in hand with financiers and their requirement for additional security. He looks forward to bringing his experience from the finance sector and meeting more BIBA members.
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BENEFITS TO BIBA MEMBERS
Marketing material
Face-to-Face broker & client training
Ongoing support
Only provide Trade Credit Insurance
Speed of response
10% introductory commission & 5% on renewals
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BIBA MEMBERS SAY…
“We have been most impressed by the professionalism of CMR Insurance Services with their ability to demystify the area of Credit Insurance both for ourselves and our clients also to mutual advantage” Paul Farrant – Managing Director Gill Noble and Co Ltd – BIBA Member
“We were guided to CMR by our contact at BIBA – our client based in the North of England with owners in the US were seeking advice and guidance on Credit Insurance – we were happy to introduce CMR and found that their efficient and professional service gave the client what they needed and led to a successful outcome for all concerned” Mr. David Eve – H R Jennings & Co Limited – BIBA Member
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SUMMARY
Trade Credit Insurance protects what is frequently a client’s largest asset – their debtors
It’s for covering the risk of bad debts which can destabilise businesses
It’s an aid to help businesses grow even during uncertain times
020 8773 5596
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SUMMARY
Check our LinkedIn page where we post informative and topical blogs – CMR Insurance Services Limited
We’re on Twitter - @CMRInsuranceLtd
And Facebook - @CMRInsuranceServicesLimited
We also have a dedicated website for BIBA members biba.cmris.org.uk
020 8773 5596