Credit Insurance - Presentation

www.gargashinsurance.
com
Leading national Full spectrum of
broker in the insurance
Gargash GCC region. intermediary
services
Insurance
Services LLC 50 years old organization,
Overview part of the renowned
Gargash group.
GARGASH
INSURANCE
500 Years of collective
experience
300 + Expert Advisors
5000 + Businesses Trust Us
Chartered Insurance 1 Million + Customers

Institute (CII) UK Network reach
Certified Professional team across the Dedicated Claims Assistance
size of almost 400 region
individuals
Product
www.gargashinsurance.com
agenda
 Overview – Credit Insurance
 Advantages & benefits of Credit Insurance
 Policy coverage and timeline
 Excluded risks
 Partnering with Gargash - benefits
 Moving forward / what you need to do
Copyright@2010 Gargash Insurance. All rights reserved

overview
Sales are done either on :

 Cash
 Open Credit terms
 Through a Letter of Credit
A company uses Open Credit Terms to :

 Maintain commercial competitiveness
 Expand business and increase market share using flexible repayment
terms
 Maintain existing B2B relations and create new ones

overview
HOWEVER
 Open Credit Terms are accompanied by a Non-Payment risk which

could be due to:
o Insolvency of a company’s clients
o Default by a company’s clients
Non-payment is one of the main reasons for Corporate failure.
1 in 5 bankruptcies occur due to Non-payment.
Non-payment can cause financial loss, restricted cash flow & loss of
turnover.

overview
 Trade Credit Insurance covers the Non-Payment risk exposure of a company
while allowing it to enjoy the benefits of trading with clients on credit.
 Trade Credit Insurance (TCI) can replace Letters of Credit (LCs) for the
following reasons:
o Companies can negotiate their trade deals faster
o Less documentation required for TCI than an LC
o TCI is cheaper than obtaining an LC
 The Trade Credit Insurance package also includes facilities like:

o Debt collection
o Risk analysis
o Monitoring to help companies manage their receivables more efficiently

advantages
 TCI safeguards a large percent of a company’s assets

o Protection for an unprotected asset - Accounts Receivable
 TCI supports a company’s sales goals :

o Freedom to expand into unfamiliar territory
o Generate larger sales by extending larger lines of credit
 TCI strengthens a company’s credit risk management controls :

o Assess a potential customer before doing business with them
o Assess credit-worthiness of existing clients
o Over dues are collected more efficiently and cost effectively

multiple benefits
NON/SLOW
PAYMENT
Buyer
POLITICAL
Improve financing
CURRENCY
Customer INSOLVENCY
Enhanced
credit management
Cashflow

enhance your credit management
Unbiased, third party credit opinions
Continuous monitoring of buyer risks
Reduce your credit investigation costs
Collections
Easier to forecast your premiums & write-offs

improve your financing
 Having credit insurance improves your own

creditworthiness to bank and available funding.
 Reduce concentration risk
 Increase the pool of ‘eligible’ receivables, often

including foreign receivables
 Reduce interest rates
 Strengthen client relationships ; you can offer better

financing terms in the knowledge you can obtain
funding

increase your sales
 Credit insurance can enable you to sell more goods /

services, and possibly on longer credit terms, while
mitigating the risk of non-payment from your buyers.
 Credit insurance may allow you to offer open

account terms; a more competitive alternative than
requiring customers to obtain letters of credit.
 Credit insurance assists you with entry into new

markets or start relationships with new customers.

policy coverage
COMMERCIAL CREDIT RISK
Encompasses non payment by buyers due to
INSOLVENCY
• Formal dissolution of a corporate entity or sole proprietorship such as:
• Bankruptcy filing, winding up or administration order

• Liquidation or receivership
• Comparable cases of insolvency in other countries.
PROTRACTED DEFAULT
• Non Payment within 6 months after due-date.
PRE CREDIT RISK
• Risk related to losses caused by a buyer's insolvency during the manufacturing or

contract period such as before delivery of goods or completion of contract.

policy coverage
POLITICAL RISK
Encompasses non payment by buyers due to
TRANSFER DIFFICULTIES
• Political or economic event preventing or delaying transfer of payments.
GOVERNMENT MORATORIUM
• Decision from the buyer’s government to (temporarily) prevent release of all hard
foreign currency and prevent further free-fall devaluation, e.g., Indonesia in 1998.
DISCHARGE OF DEBT
• Decision from the buyer’s government introduces a law to protect importers from
having to find more cash.
CONTRACT FRUSTRATION
• Arbitrary action by a foreign government preventing seller or buyer from
performance of the contract – e.g. Embargo /Ban on US goods.
WAR
• The occurrence outside your country of war (civil, riots, cyclone, floods, earthquake
etc) which prevents performance in whole of part performance of the contract.
PUBLIC BUYER DEFAULT
• The failure or refusal on the part of a public buyer to fulfill any of the terms of the
contract.

policy coverage – timeline
Protracted Default Standard Policy
excluded risks
 Any Trade Disputes whatsoever are not covered. However the coverage attaches
itself to the disputed invoice and the coverage is paid when the dispute is resolved
in favor of the insured.
 Outstanding debts arising from the following reasons are uninsurable:
o Sales to companies associated with or controlled by the insured.
o Outstanding debts arising from any activity which is not part of the ordinary
business operations of your company.
 Losses caused Radioactive contamination.
 Failure to obtain an import or export license which leads to a loss or a contract
which breaks exchange control regulations.
 Interest after due date.
 Losses arising from a war between any of the Five Great Powers : China, France, the
UK, Russia and the U.S.A.
 Currency fluctuations except those covered under Discharge of Debt.
 Penalties or damages (to be paid by the buyer to the Insured).

partnering with gargash - benefits
CONSULTATION
•Review •Ensure quality of Insurers –financial •Claims

needs and strength servicing
recommend •Customized Policies – best local
insurance standards •Assistance on
programme •Ensure competitive prices claims
•Check the insurance documents reporting
STUDY OF RISK for compliance and accuracy
CLAIMS
EXPOSURES •Ongoing review and monitoring

moving forward
 Provide completely filled-in proposal form & other supporting docs
 Gargash to arrange for the quotes along with buyers credit limit report
 Arrange for a mutual meeting with the insurer upon finalizing the terms
 Assist to place the policy and arrange to training the employees on the
on-line information service portal to manage all your day-to-day trade
receivables management
 Notify Gargash / insurance company at the right time of any threatening
loss.
 Coverage is subject to compliance to policy conditions.

Delivering
Excellence
GARGASH INSURANCE SERVICES LLC

Certified ‘Chartered Insurance Broker’ by The Chartered Insurance Institute – London
Corporate Insurances | Personal Insurances | Special Risks | Life & Investments | Re-Insurance
Dubai | Abu Dhabi | Sharjah | Muscat

CONTACT US
DUBAI SHARJAH ABU DHABI

#305, Pyramid Centre, #602, Bel Rasheed #302,Dhafir Tower,
Umm Hurair Road, Bur Dubai, Tower 1, Next to Crystal Plaza, Fatima Bint Mubarak St
P.O. Box: 50251, Dubai, UAE Buhairah Corniche, (Najda street), Abu Dhabi,
Tel. No.:04-3379800 , P.O. Box: 33140 Sharjah, UAE. P.O. Box : 107001, UAE
Fax: 04-3378001 Tel. No.:06-5754848 Tel. No.:02-6717100
Fax: 06-5754847 Fax : 02 - 6762855

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www.gargashinsurance.

300 + Expert Advisors

5000 + Businesses Trust Us

Chartered Insurance 1 Million + Customers

 Overview – Credit Insurance

 Advantages & benefits of Credit Insurance

 Policy coverage and timeline

 Partnering with Gargash - benefits

 Moving forward / what you need to do

Copyright@2010 Gargash Insurance. All rights reserved

Sales are done either on :

A company uses Open Credit Terms to :

Copyright@2010 Gargash Insurance. All rights reserved

 Open Credit Terms are accompanied by a Non-Payment risk which

Non-payment is one of the main reasons for Corporate failure.

1 in 5 bankruptcies occur due to Non-payment.

Copyright@2010 Gargash Insurance. All rights reserved

 The Trade Credit Insurance package also includes facilities like:

Copyright@2010 Gargash Insurance. All rights reserved

 TCI safeguards a large percent of a company’s assets

 TCI supports a company’s sales goals :

 TCI strengthens a company’s credit risk management controls :

Copyright@2010 Gargash Insurance. All rights reserved

Copyright@2010 Gargash Insurance. All rights reserved

Unbiased, third party credit opinions

Continuous monitoring of buyer risks

Reduce your credit investigation costs

Easier to forecast your premiums & write-offs

Copyright@2010 Gargash Insurance. All rights reserved

 Having credit insurance improves your own

 Reduce concentration risk

 Increase the pool of ‘eligible’ receivables, often

 Reduce interest rates

 Strengthen client relationships ; you can offer better

Copyright@2010 Gargash Insurance. All rights reserved

 Credit insurance can enable you to sell more goods /

 Credit insurance may allow you to offer open

 Credit insurance assists you with entry into new

Copyright@2010 Gargash Insurance. All rights reserved

• Formal dissolution of a corporate entity or sole proprietorship such as:

• Bankruptcy filing, winding up or administration order

• Comparable cases of insolvency in other countries.

• Non Payment within 6 months after due-date.

PRE CREDIT RISK

• Risk related to losses caused by a buyer's insolvency during the manufacturing or

Copyright@2010 Gargash Insurance. All rights reserved

Copyright@2010 Gargash Insurance. All rights reserved

Protracted Default Standard Policy

Copyright@2010 Gargash Insurance. All rights reserved

•Review •Ensure quality of Insurers –financial •Claims

Copyright@2010 Gargash Insurance. All rights reserved

 Provide completely filled-in proposal form & other supporting docs

on-line information service portal to manage all your day-to-day trade

 Notify Gargash / insurance company at the right time of any threatening

 Coverage is subject to compliance to policy conditions.

Copyright@2010 Gargash Insurance. All rights reserved

GARGASH INSURANCE SERVICES LLC

Dubai | Abu Dhabi | Sharjah | Muscat

Copyright@2010 Gargash Insurance. All rights reserved

DUBAI SHARJAH ABU DHABI

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