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(3) What happens if there is a potential problem? If you have an insurance policy and there is a problem with the underlying risk, whatever it might be, an insured should always check their policy to see what it has to do, because the policy will normally provide for the circumstances which have to be notified. If there is anything that is likely to give rise to a loss, you have to let the insurers know. The policy will also have provisions which require an insured to act with due diligence or to take reasonable measures to avoid and minimise that loss, because an insured must take any precautions that they know it ought to take. This is ultimately designed to prevent an insured from acting recklessly. (4) How do I make a credit insurance claim? If there is an actual loss and an insured wants to make a claim, it’s important to understand the process and the next steps. For starters, it’s not often that a loss occurs and that a claim will immediately be submitted and/ or paid. Most credit insurance policies will have a ‘waiting period’ or ‘claims assessment period’, which is typically 180 days. This is the period which passes from the date of the loss to the date that a claim is due to be paid under the policy. The time period allows time to see if any underlying issues of payment are going to be resolved. But In the event that they’re not made, the claim will be presented in a form which may have been pre-agreed as an annex to the insurance policy. Insurance brokers are there to assist the bank or the insured
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party, as well as explain what should be expected to be dealt with in that claim form and how it should be presented. During this waiting period, the insured still has an ongoing obligation to continue to mitigate loss and take whatever steps it needs to take to preserve any recovery rights. During this period, it’s absolutely vital that the insured continues to consult with the insurers on the steps that are taken during this period. In most cases, the insurers will appoint a loss adjuster. The loss adjuster is someone who will come to review the claim figures, make sure that the insured has complied with their duties and obligations, and also have a look at the recovery prospects and what’s being done to recover the loss. In many cases, the loss adjuster will visit the insured to collect information and then will report back to the insurers and there may be a further period of question and answers. Ultimately, the insurers will decide on the claim using the facts that have been obtained from the loss adjuster. And then of course, following that process, a valid claim should be paid. The policy will contain terms which will make express provision for these matters. This is a process which insurance brokers have been through often with their clients, and they will always be there to provide guidance and assistance to the insured party.
SUMMARY OF KEY STEPS AND POINTS: Date of loss and waiting period Broker assists the insured with presenting the claim to insurers Insured submits its claim, form may have been pre-agreed
at the time the policy was negotiated During the waiting period, • Insured has an on-going obligation to take steps to mitigate loss and to preserve any recovery rights that it may have • Continue to consult with insurers to agree any actions to be taken during this period • Insurer appoints a loss adjuster to review the claim, ensure compliance by the insured of duties and terms and assess the loss Loss adjuster may visit the insured to collect information, and may also consider and report on recovery options
PRODUCT TYPES WITHIN TRADE CREDIT INSURANCE – NON-PAYMENT INSURANCE VERSUS POLITICAL RISK INSURANCE DP: What are the different product types in the market, and how does capacity for each differ? SB: For simplicity, we would always split our market into the non-payment insurance product and the political risk insurance product (capacity wise).
MARKET CAPACITY FOR NON-PAYMENT AND PRI On the non-payment insurance side, you have somewhere betweenUSD2-3 billion of capacity available, depending on the underlying ownership of the private or public (government owned) counterparty. On the political risk side, you’re slightly above USD3 billion in potential capacity. Whenever we say these large numbers and talk tradefinanceglobal.com
