DEMYSTIFYING TRADE CREDIT INSURANCE

Christian Hoy

James Earley

AGENDA

Background to CMR

Learning Objectives

High profile company failures in 2018

Definition of Trade Credit Insurance

The importance of Trade Credit Insurance

Uncertainty

How does Trade Credit Insurance work?

Policy Types

BIBA Relationship Managers

CMR INSURANCE SERVICES

29 years in business

Appointed Representative of Atradius

Only provide Trade Credit Insurance

Commercial lines - B2B

BIBA Scheme Provider since January 2018

LEARNING OBJECTIVES

1. Understanding Trade Credit Insurance

2. The benefits of Trade Credit Insurance

3. The importance of Trade Credit Insurance

HIGH PROFILE COMPANY FAILURES

Carillion Claire’s Accessories

Toys ‘R’ Us

Maplin House of Fraser

Patisserie Valerie

STATISTICS

• Insolvencies in 2018 were up 10%

• Equating to 44 a day

• 69% of businesses have been affected by bad debt *

• 37% of businesses have been a victim of fraud *

• 42% of businesses feel the economy is the biggest challenge they’ll face in 2019 *

* Figures from Business Census 2019 - Creditsafe

Order made

WHAT IS TRADE CREDIT INSURANCE?

Trade Credit Insurance protects companies from the risk of non-payment from their business customers that they have extended credit to.

Payment made upon due date

Delivery/Service provided

WHAT IS TRADE CREDIT INSURANCE?

Order made

Delivery/Service provided

Trade Credit Insurance Contract

Buyer Insolvent

OFTEN REFERRED TO AS…

Bad debt protection

Bad debt insurance

Debtor insurance

Sales invoice insurance

Debtor protection

Sales invoice protection

Credit insurance

THE IMPORTANCE OF TRADE CREDIT INSURANCE

Protection Replaces money that is lost in the event of a bad debt

Profitability Trade credit insurance promotes improved profitability by

allowing the increase of exposure to both new and old customers, whilst staying protected.

Peace of Mind Running a business can be stressful as there is so much to think

about. Knowing that one of the largest assets of a balance sheet is protected can help reduce that stress.

FURTHER BENEFITS OF TRADE CREDIT INSURANCE

Growth Businesses can expand as trade credit insurance enables them to

deal with new clients and increase credit lines to existing ones

Information It provides greater access to customer information. This up to

date information allows business owners to make informed decisions

Cash-flow A policy complements and works with existing credit control

procedures to improve days sales outstanding Improves access to finance

UNCERTAINTY

Brexit

US Isolationist

policies

US/China potential trade war

The general economic outlook

Honda closing UK

plant

WHICH WAY WOULD YOU CHOOSE?

Quick Quote

WHAT INFORMATION IS REQUIRED?

Trade sector

Bad debt history

Turnover

Export/Domestic/Combined

Number of buyers

Policy Price

Food Wholesaler

£0

£1,000,000

25

£3,500 per annum

THE PROCESS

Information Type of policy Non-binding indication of

terms

Review of key buyers

Meeting with the client

Training and signing

Ongoing support from a dedicated administrator

CREDIT LIMITS AND UNDERWRITING

Discretionary Limit

Underwriter

Companies House

Policyholders

Credit Reference Agencies

Directly from Buyer

CLAIMS

Notify CMR Copy Orders

Copy Invoices Proof of Delivery

Insolvency

Confirmation of Debt with IP

Justification of Discretionary

Limit

Claims Forms Pre-Claims

Assessment

Submission of Claim

Claim Paid

POLICY TYPES

Single Risk Whole Turnover

Variable Monthly

declaration

Fixed Price Annual Estimated

T/O

Multicurrency

Combined Export Only

UK only

Covers up to 4 buyers Generally more restrictive

Tailored to each customers’ need

STRUCTURE

Policy Schedule

• 12 Month Policy Period • Fixed Price • Insolvency, Protracted Default

and Political Risk • Goods or Services • Work in Progress • 90% Indemnity

Policy Schedule

• Deductible • 45 day Maximum Extension

Period • Maximum Terms of Payment • Insurer’s Maximum Liability • Maximum Credit Limit • Discretionary Limit

BIBA RELATIONSHIP MANAGERS

Phil Hendy (North) Phil is our BRM in the north and is willing to meet with any member looking to add trade credit to their offering. Phil has worked in the credit insurance industry for 20 years and is excited to meet plenty of brokers looking to understand trade credit insurance further.

Nigel Simkins (South) Nigel has always maintained a long relationship with CMR and he is well aware that trade credit insurance goes hand in hand with financiers and their requirement for additional security. He looks forward to bringing his experience from the finance sector and meeting more BIBA members.

BENEFITS TO BIBA MEMBERS

Marketing material

Face-to-Face broker & client training

Ongoing support

Only provide Trade Credit Insurance

Speed of response

10% introductory commission & 5% on renewals

BIBA MEMBERS SAY…

“We have been most impressed by the professionalism of CMR Insurance Services with their ability to demystify the area of Credit Insurance both for ourselves and our clients also to mutual advantage” Paul Farrant – Managing Director Gill Noble and Co Ltd – BIBA Member

“We were guided to CMR by our contact at BIBA – our client based in the North of England with owners in the US were seeking advice and guidance on Credit Insurance – we were happy to introduce CMR and found that their efficient and professional service gave the client what they needed and led to a successful outcome for all concerned” Mr. David Eve – H R Jennings & Co Limited – BIBA Member

SUMMARY

Trade Credit Insurance protects what is frequently a client’s largest asset – their debtors

It’s for covering the risk of bad debts which can destabilise businesses

It’s an aid to help businesses grow even during uncertain times

biba@cmris.co.uk

020 8773 5596

SUMMARY

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We also have a dedicated website for BIBA members biba.cmris.org.uk

biba@cmris.co.uk

020 8773 5596

biba@cmris.co.uk

020 8773 5596

ANY QUESTIONS?