Claim

Credit insurance is a solution that protects companies against the risk of non-payment by their customers. If the case arises, the insurer pays an indemnity to cushion the impact of the loss incurred. Whether your business is based in Dubai or abroad, it is important to protect it with credit insurance. Defaulting on payments can slow down your business and even threaten your company: protecting your firm’s sales is the essential guarantee of its survival!

Claim with Credit insurance

The insurance company will pay a claim up to the predetermined amount established within the policy parameters. The amount is a percentage of the outstanding debt. This percentage usually ranges from 75% to 95% of the invoice amount,

When a claim is filing beyond the maximum filing Date, the indemnification is denied by the insurance company. Indeed the longer a bad debt is outstanding, the less likely it will be recovered. Always remember that insurance policies as a Maximum claim filing period to ensure the best chance of recovery or mitigation of the loss. To avoid this, do not file your indemnification to late.

The benefit of the trade credit insurance : even if the policyholder never makes a claim, the insurer help the firm to increase sales and profits up to 20%.

Example : a company credit department had restricted a credit line to a customer to $80,000. But they subscibe a trade credit insurance and the insurer approved a limit of $130,000 on that same customer. With a 20% margin and an average days sales outstanding of 45 days, the company has increased their sales and realized an incremental annual gross profit of $80,000 on just that one account.

Compensation: a period of 3 to 6 months

If, in spite of the measures taken, the debt remains partially or totally unpaid, the insured will be compensated for the damage suffered as a result of the declared or presumed insolvency of its client. The commercial dispute will most often suspend the indemnity, the insurer having to check whether it is a dispute in good faith or a dilatory manoeuvre on the part of the debtor.

The indemnity will be paid at the end of a period that varies according to the policy: A maximum of 3 to 6 months after the date of the last unpaid extended term.

Example: With a payment term 60 days and extended once: 60 + 30 days = 90 days. The compensation period of 90 days is counted from the 90th day, so the total period is 180 days in this example. The compensation paid takes into account, within the limit of the guarantee granted by the insurer, all the elements of the unpaid invoice, excluding :
– Late payment indemnities,
– Penalties deducted by the insured, after deduction of any partial payments or proceeds from the resale of goods which could have been recovered.

To the amount of the indemnifiable loss shall be added the costs incurred for recovery. The indemnity shall be calculated by applying to the total amount thus obtained the percentage of cover provided for in the contract (see percentage of cover). The payment of the indemnity shall have the effect of subrogating the insurer in all the rights held by the insured on the debt subject to the indemnity, subrogation which reserves to the insurer the fruit of any subsequent recovery which may occur.

Indemnification with Letters of Credit

With a documentary letter of credit, the claims process is laborious and tedious. In addition, the treatment period can be lengthy by minor discrepancies in paperwork.

Claims threshold

it corresponds to the amount below which indemnification are not covered by the insurance policy and must be retained by the insured for own account.

Indemnification waiting period

The minimum period, usually starting from the due date of payment, after which a claim may be submitted to the insurer for payment.

Notice of claim

An application by the insured for indemnification of a loss incurred and covered by the insurance policy