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Hollard launches a trade credit insurance product with a twist

19 September 2016 Hollard
Gareth Joubert, Rob Hallier, Ann Buitendag (Debtsource), Lee-Ann Dobrescu, Paolo Cavalieri, Frank Knight (Debtsource)

Gareth Joubert, Rob Hallier, Ann Buitendag (Debtsource), Lee-Ann Dobrescu, Paolo Cavalieri, Frank Knight (Debtsource)

The company has teamed up with credit management specialist Debtsource to offer per-debtor cover bundled with an end-to-end credit management service.

“From a client perspective, the problem with trade credit insurance has always been that it’s seen as a single, homogenous risk,” says Hollard Trade Credit MD Gareth Joubert. “Traditionally, insurers look at a client’s debtors book, pick the risks they are prepared to underwrite and then generate a premium. This works fairly well for larger clients, but smaller businesses often struggle to find value insuring their debtors in this way.” 

The answer is to introduce a mechanism that rates each debtor individually and to use that rating to generate a premium for each risk. Clients can then decide which of the risks they wish to insure. 

“No two debtors are the same,” says Joubert. “A default by one debtor can have a completely different impact on a business to a default of the same value by another debtor. And that’s where we see the true value in the partnership. Debtsource has the systems and the resources to generate accurate risk ratings on specific debts, which we use to underwrite each debtor individually. Clients can then adjust pricing using their risk premium as a guide.” 

This also means no punitive post-claim premiums. 

“Risk is calculated on the debtor’s business and not on the policyholder’s,” says Joubert.  “Paying a claim on a particular debtor will therefore have no impact on the remaining risk, which means the premium remains the same.” 

There’s also no waiting period. 

“As soon as there’s an acknowledgement of debt, we pay,” says Joubert. “So often we see companies going under during the waiting period, before they even receive their settlement. We understand that a single defaulting debtor can bring down an entire company, so why wait to make the payout?” 

The underlying credit management service provides the foundation for the Hollard Trade Credit insurance product. 

“The reason per-debtor trade credit insurance hasn’t been viable in the past is because insurers lacked the resources to undertake thorough credit management processes,” says Frank Knight, CEO of Debtsource. “We have been making effective credit limit decisions since 2003, based on careful research and using multi-credit bureau platforms, together with finely honed in-house research and monitoring systems. Combining our services with Hollard’s underwriting skills brings these two key components together into an extremely customer-centric offering.” 

Hollard Trade Credit clients receive ongoing credit management services as part of the deal. 

“All we need each month is a debtors age analysis from each client,” says Knight. “We do an assessment and then call Hollard in if we spot any concerns.”

“It’s all about having the conversations and then keeping them going,” says Joubert. “Once we have a client on board, we keep them in the loop constantly. It’s a three-way deal between Hollard, Debtsource and the client – and no one is ever left out.”

 

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