'Single Risk' solutions: protection against a single debtor
'For a very long time, credit insurers only offered the possibility of covering an entire debtor portfolio,' says Paul van Uden, Managing Director of Xolv. 'The classic credit insurer is based on the spreading principle. Here, all debtors of a company are included in the insurance solution. This creates a mix of good risks and less good risks, which gives the insurer a degree of comfort.'
However, there was an increasing demand from the market to insure only a few debtors or even just one debtor. 'This would involve a debtor for whom the individual outstanding balances are particularly high, so the financial loss in case of non-payment is also high. This demand has prompted some insurers to offer 'Single Risk' solutions. These provide protection against insolvency of one or a limited number of debtors.'
'Non-cancellable' limits: more security for clients
Within traditional credit insurance, the insurer has the option to reduce or even withdraw the credit limit. If this reduction or withdrawal happens with a large and important debtor, it can lead to financially dangerous situations. Paul van Uden: 'As more and more companies felt the need for more security, some insurers introduced so-called 'non-cancellable' limits. These are covers with non-cancellable limits for a maximum duration of one year.'
'Top-up' policies: additional coverage by a third party
Sometimes the insurer approves only part of the credit limit application. However, many companies want the full credit limit covered. For these companies, the 'Top-up' policy has been introduced. 'When the primary insurer provides insufficient limit on a debtor, a third party can provide additional - temporary or permanent - cover. Usually, this third party takes over the terms of the primary credit insurance,' says Paul van Uden.
Want to know more about credit insurance or any of the above solutions?
If so, please contact us at info@xolv.nl or 073 - 8200295
