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Credit and Surety Insurance

Credit insurance indemnifies companies for financial losses arising from insolvency, bankruptcy, prolonged non-payment, or extended delinquency, always within the framework of a commercial transaction.

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Advantages of Credit Insurance

The risk of non-payment is transferred to an insurer, making it possible to pass on the cost of insurance to customers, even based on the default risk presented by each of them.

Thanks to the insurer’s analysis of clients, it is possible to anticipate problems and incidents, control billing, and adjust the invoice collection process according to the client.

The insurer monitors the evolution of credit quality and the payment behavior of clients, promptly alerting the insured of any incidents, anomalies, or insolvency situations.

The credit quality of potential or prospective clients is known in advance, allowing the setting of the collection period, risk exposure, and even the insurance cost to be passed on to the sale correctly during the closing of the transaction with each client.

Insurers handle the collection of all invoices, even if some exceed the insured limit. It is also possible to entrust the insurer with the collection of uncovered debt, which is especially important in the case of exports.

Credit insurance supports structures of Non-Recourse Factoring, Project Finance, and is a key element in Securitization programs.

Types of Credit Insurance

  • Coverage of the entire portfolio.
  • Risk management of client-debtors by the insurer.
  • Credit limits are monitored and reviewed by the insurer.
  • Debt collection is managed by the insurer from the moment of non-payment notification.
  • Coverage of the entire portfolio, excluding the “lower tranche” (below a threshold).
  • Risk management by the insured, without insurer monitoring (Discretionary Credit Limit). There is an aggregated annual deductible.
  • Non-cancellable limits during the policy year.
  • The insurer only handles collection efforts from the moment the indemnity is paid.
  • Coverage of the entire portfolio, setting a risk threshold (not a deductible).
  • There is some discretionary limit, usually limited by a coverage percentage.
  • Credit limits are monitored and reviewed by the insurer.
  • Debt collection is managed by the insurer from the moment of non-payment notification.
  • A policy contracted with another insurer different from the primary policy issuer acts in excess of the credit limits granted by the primary policy.
  • Coverage for a single contract/project or coverage for recurring sales to a single debtor-client.
  • Coverage for key clients, establishing a classification threshold that determines which clients are insured.
  • Insurance for a specific number of clients, according to a criterion, usually objective and conditioned on meeting certain requirements regarding the number of debtors and insured billing.

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