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KDYHDFUHGLWOLPLWDWWKHWLPHULVNFRPPHQFHV • Payment terms and extension period; policy duration.
‡ :LWKRXW D &UHGLW /LPLW ,QVXUHG¶V VDOHV WR D VSHFL¿F •Currency to be used.
buyerarenotcovered. •Estimated turnover.
• CreditLimitscan bewritten(i.e.determined by •Deductibles.
,QVXUHU RU GLVFUHWLRQDU\ GHWHUPLQHG E\ SROLF\KROGHU •Maximum liability.
from credit reports or trading experience – small • Premium rate, estimated premium, minimum premium,
amounts only. premium payment frequency.
‡ 7KH &UHGLW /LPLW PXVW EH VXI¿FLHQW WR FRYHU WKH DFWXDO • Aggregate of Credit Limits, maximum credit limit
or expected amount of total outstanding balance with amount, maximum number of credit limits.
abuyer. ‡ 'LVFUHWLRQDU\ OLPLW LI DQ\ DQG LWV MXVWL¿FDWLRQ FULWHULD
• Credit limit fees, Credit Check amount and fee.
Underwriting the credit limit Attached to it would be a copy of proposed policy
The principal behind risk underwriting on the individual ZRUGLQJ ZLWK DQ\ FXVWRPHU VSHFL¿F HQGRUVHPHQWV DQG
buyer is that, from the information available, the exclusions. At the bottom is an acceptance box for
XQGHUZULWHUPXVWEHVDWLV¿HGWKDWWKHEX\HUKDVWKH signatory’s name, signature and date of signing.
DELOLW\WRSD\ DQGSD\RQWLPH IRUDOO JRRGVVROGIRU
eachandeveryordermadeduringthepolicyperiod. Declarations – explanation
7KLV PHDQV DQDO\VLQJ ¿QDQFLDO DQG QRQ ¿QDQFLDO • A periodic return of contracts entered into and/
LQIRUPDWLRQ H[DPLQLQJ WKH EDODQFH VKHHW SUR¿W DQG ORVV or goods shipped (or invoices raised in the case of
DQG FDVKÀRZ VWDWHPHQWV .H\ LQGLFDWRUV DUH FUHGLWRU VHUYLFHV FHUWL¿HG E\ WKH FXVWRPHU DV UHSUHVHQWLQJ D
balances, net worth levels, liquidity ratios, corporate full and true statement of account.
PRUDOLW\ KRQRXULQJ SDVW FRPPLWPHQWV SD\PHQW • If no sales were conducted in the declaration period, a
conductwithothersellers,etc. nil return is still required.
Pricingforthepolicy Reasons for Declarations
7KHUH DUH QR ¿[HG µSULFH WDEOHV¶ LQ FUHGLW LQVXUDQFH • Obligation of the insured to enable insurer to raise
VDYHPD\EHIRUWKH60(SROLFLHV ,QWKHPDLQ PDQ\ premium invoices.
credit insurers use pricing models into which they feed •To calculate broker commission.
avarietyoffactorsaffectingpremiumrate,including • To monitor exposure levels on countries (and on large
type of business, turnover size, buyer spread, country EX\HUV
VSUHDG EDG GHEW UHFRUG ORVV KLVWRU\ SD\PHQW WHUPV • For reinsurance reporting.
and other factors affecting price, such as: • To calculate any taxes due.
• Percentage of cover required.
• Lengthofcover. Whatdocustomersexpectfromacredit insurer?
•Type of cover: ‡ *RRG VHUYLFH VSHHG DQG UHOLDELOLW\
:KROH WXUQRYHU RU • Reliable information.
6HOHFWHGEX\HUV LQFUHDVHVULVNDQGSUHPLXPUDWH RU •Competitive premium rates.
6HOHFWHG PDUNHWV ([SRUW LI RQO\ ULVN\ FRXQWULHV WR • Insurer with good risk appetite.
EH FRYHUHG KLJKHU SUHPLXP UDWH
The Model calculation process is then activated to What are the obstacles to selling credit insurance?
produce a single premium rate tailored to the prospect’s • Lackofknowledgebythecustomerofthecredit
particular circumstance. Hence, no two policies would insurance concept.
havethesamerateeveniftheyareinthesameindustry ‡ /DFN RI DZDUHQHVV E\ WKH FXVWRPHU RI WKH UHDO EHQH¿WV RI
and with similar turnovers (differences in loss histories, the policy – prevention, credit monitoring, compensation
SD\PHQW WHUPV EX\HUV HWF PD\ PHDQ D GLIIHUHQW UDWH DQG VHFXULWLVDWLRQ EDQN ORDQV
• Complacency or excessive faith that buyers will always pay.
The Credit Insurance Offer
Offerscanbeintheformof anon-bindingrateindication Selectingacreditinsurer–consider:
or estimate containing: •Capacity for cover.
• Policyholders details (Name, broker, customer number, • Premium rate and administration fees.
HWF •Policy structure.

72 NZ Export & Trade Handbook 2018