Page 75 - Export and Trade

Trade Credit Insurance and Collections

•Claims reputation. takesallpracticablemeasurestorecoverthedebtin
• Speed of service. terms of the policy.
• Policy wording. • Policyholderalsofollowspolicyrequirementtonotify
• Online servicing capability (Very important vis-a-vis WKH ,QVXUHU ZLWKLQ D VSHFL¿HG WLPH
DFFHVV IRU SROLF\KROGHUV • Insurer will record the overdue and examine buyer’s
• Debt Collections assistance. general payment performance with other suppliers.
• Insurermayelecttocomeoffrisk–i.e. cancelallother
Administration credit limits on that buyer.
Insurer will highlight key administration points to new • At the appropriate time, policyholder will lodge a
policyholders on policy delivery: claim form with Insurer together with all the required
• Premium frequency (Up front, semi-annual, quarterly, supporting documents – invoices, statement of
PRQWKO\E\GLUHFWGHELW account, evidence of delivery, contract of sale, details
• Applying for Credit Limits and noting any conditions of communications with buyers.
attached to the cover (for example, an amount which • A claim must usually be submitted no later than six
is the maximum acceptable risk for the insurer on an months from the date of loss.
individual buyer/receivable; Hold cover – the transfer • Policyholder must take all necessary steps to mitigate
RI OLPLW FRYHU IURP RQH LQVXUHU WR DQRWKHU the loss.
• Declarations of business: annual, semi- annual,
quarterly or monthly. Problem Areas
‡ 1RWL¿FDWLRQ RI RYHUGXH DFFRXQWV DQG FODLPV • Non-compliancewithpolicyterms–e.g.failureto
• Online Policy Management – applying for new declare all insurable sales.
oramendedcreditlimitdecisionsand loading ‡ /DWH QRWL¿FDWLRQ RI RYHUGXH LQYRLFH SUHMXGLFH WR WKH
GHFODUDWLRQV QRWL¿FDWLRQ RI SD\PHQW GHOD\V FODLPV LQVXUHU
plus viewing policy terms, conditions and alerts. ‡ &UHGLW OLPLW H[FHHGHG RYHUWUDGLQJ
• Lackofdebtchasing orlackof duediligenceinthe
Claims and Recoveries credit control process.
• Claims payments justify both the decision to insure • Failure to disclose a material fact when applying for
and the choice of insurer. cover.
• Surveys consistently show that the payment of a claim • Lackofpursuit ofRetentionofTitleorenforcementof
is the most important reason to credit insure and the any guarantees.
prime reason to insure with a particular insurer. ‡ 7UDGLQJ EH\RQG WKH 0D[LPXP ([WHQVLRQ 3HULRG 0(3 ±
• Quick claims settlement replaces lost working capital therefore not covered.
DQGDYRLGVWKHFDVKÀRZµGRPLQR¶HIIHFW • Disputes – e.g. caused by termination of distribution
• Insurers approach all claims on the same basis agreements,failuretodeliverontime,quality/quantity
regardlessofvalue.If theInsured hascompliedwith of goods not up to expectation.
the policy terms and conditions, then the Insurer will • Allocation of payments – e.g. cash trading after default,
pay the claim. payments should be allocated to the oldest invoice, but
• Brokers have an important role in claims by sometimes for practical reasons they are not.
submitting the fullest documentation and supporting
letter. Recovery Options
• Brokers must strive for the best claims adjudication Reschedule the debt, repossession of goods – e.g. via
outcome for their clients. retention of title clause or, as a last resort, refer to a
• A policyholder can sometimes make a commercial local lawyer.
decisiontoforegolodgingaclaiminorderto preserve )RU UHVFKHGXOLQJ WKHUH PXVW EH DQ XQHTXLYRFDO
the lucrative relationship it has with a sometimes acceptance in writing by the buyer of the amount due
overdue buyer. and payable. Agreement effectively converts the debt
into a loan repayment contract.
Claims Stages Other Options
• Insured buyer fails to pay by due date or by extended • Accepting a lump sum payment i.e. discounted in ‘full
due date. DQG ¿QDO VHWWOHPHQW¶ EHZDUH RI YRLGDEOH SUHIHUHQFHV LI
• Policyholder makes formal demand for payment and EX\HU JRHV LQVROYHQW VKRUWO\ WKHUHDIWHU

NZ Export & Trade Handbook 2018 73