Before you read on, it is good to know that there is no mathematical formula to judge your buyer's creditworthiness. There are many factors that determine an insurer's final judgment, but your knowledge of and experience with your customer are often critical in getting a higher limit. Pleasant thought, right?
Below, we list six ways to get a higher limit.
1. Mediation by Xolv
One of our main jobs as intermediaries is to argue with insurers about issued limits. Is the right information missing, is it dated or are the figures bad? Xolv proactively looks for the most recent and correct information. We have access to multiple databases and contact the debtor if required. In addition, we have a senior credit analyst employed in the person of Coen Blazer, who has been working in the credit insurance industry for a long time and is a great addition to our team with his knowledge and skills.
2. Temporary limit increase
Depending on the situation, we may convince the credit insurer to issue a temporary limit issue. This may occur in the case of a seasonal pattern, a one-off order or until the debtor's new figures are available, among others.
3. Top-up coverage primary insurer
The top-up limit is an additional credit limit that can be issued up to double the reduced or lowered credit limit. We do not apply for a top-up limit directly. First, we conduct a careful analysis out to see if the credit limit originally applied for cannot still be set higher. If this is not possible, we will see whether you can apply for a top-up limit. It is even possible with some credit insurers, on debtors on which a zero limit has been set, to still set a limit.
4. Top-up coverage second insurer
Sometimes the insurer only partially approves the credit limit application, where many companies want the full credit limit covered. For these companies, the top-up policy has been introduced. When the primary insurer gives insufficient limit on a debtor, it can a third party provide additional - temporary or permanent - cover. This does require the consent of the primary insurer. Generally, the top-up insurer will assess all underinsured debtors; occasionally, a single risk can be insured as a top-up. Usually, this third party takes over the terms of the primary credit insurance. Our starting point is a doubling the existing limit.
5. Co-insurance
Co-insurance only occurs for high credit limits (think amounts from EUR 10 million). The risk then simply becomes too great for one insurer. In the case of co-insurance, the creditworthiness of the debtor are good. In principle, insurers in the Netherlands are reluctant to do this.
6. Single risk coverage
Normally, a credit insurer wants to take out a turnover policy from which all debtors are insured. This ensures a good spread and prevents anti-selection because the risk is too high. But what if one insurer does not find the debtor creditworthy, but the other insurer does? In that case, you could take out a single risk policy with this second insurer. If you have a selection of a number of debtors can offer, it is often slightly easier to place a policy with a second insurer. We call this a 'named buyers' policy. Here, the buyers' creditworthiness will be tested beforehand and the coverage to be issued, provided that in the eyes of the credit insurer, the buyer's creditworthiness is good.
As you can see: there are plenty of ways to optimise your coverage. Curious? Read more about the benefits of credit insurance through Xolv here.
