Protect Your Business from Bad Debts

Credit insurance protects your business against the risk of non-payment by commercial buyers, ensuring your accounts receivable are secure and your cash flow remains stable. At Brainstorm Insurance Brokers Limited, we provide comprehensive credit insurance solutions that safeguard your business from customer defaults, insolvencies, and payment delays, allowing you to trade with confidence and grow your business safely.

What is Credit Insurance?

Credit insurance (also known as trade credit insurance or accounts receivable insurance) protects businesses against losses resulting from the inability of their customers (commercial buyers) to pay their debts. This coverage helps businesses manage credit risk, maintain healthy cash flow, and protect their bottom line from bad debts. Credit insurance typically covers both domestic and international trade, protecting against customer insolvency, protracted default (extended non-payment), and political risks in international transactions. It provides financial compensation when customers fail to pay, while also offering credit management services to help businesses make informed credit decisions.

Coverage Benefits

Our credit insurance policies provide comprehensive protection and valuable services:

• Protection Against Customer Insolvency: Full coverage when a customer becomes bankrupt, goes into liquidation, or becomes insolvent and cannot pay outstanding invoices
• Protracted Default Coverage: Protection when customers fail to pay after an extended period (typically 90-180 days past due), even if not formally insolvent
• Political Risk Coverage: Protection for international trade against political risks including war, civil unrest, currency conversion restrictions, import/export restrictions, and government actions that prevent payment
• Compensation for Bad Debts: Financial compensation (typically 80-95% of the invoice value) when covered customers fail to pay, minimizing your financial loss
• Collection Services Assistance: Professional debt collection services to help recover outstanding amounts before making a claim
• Credit Limit Recommendations: Expert credit assessments and recommended credit limits for your customers, helping you make informed credit decisions
• Customer Credit Monitoring: Ongoing monitoring of your customers' financial health with early warning alerts about potential payment problems
• Market Intelligence: Access to credit information and market intelligence about your customers and their industries

Types of Credit Insurance

We offer various credit insurance products:

• Whole Turnover Insurance: Covers all your credit sales to approved customers, providing comprehensive protection for your entire accounts receivable portfolio
• Key Account Insurance: Coverage for specific major customers, ideal for businesses with a few large clients
• Single Buyer Insurance: Protection for sales to one specific customer, useful for large contracts or new customer relationships
• Export Credit Insurance: Specialized coverage for international trade, protecting against both commercial and political risks
• Domestic Credit Insurance: Coverage for domestic trade within Kenya or specific regions
• Excess of Loss Insurance: Coverage that kicks in after you've absorbed a certain level of losses, providing protection for catastrophic losses

Who Needs Credit Insurance?

Credit insurance is valuable for various types of businesses:

• Businesses Extending Credit to Customers: Any business that sells on credit terms (typically 30-90 days) needs protection against non-payment
• Exporters and Importers: Essential for international trade where payment risks are higher and collection is more challenging
• Manufacturers Selling to Retailers: Protects against retailer insolvencies and payment delays in the supply chain
• Wholesalers and Distributors: Safeguards against customer defaults in B2B transactions
• Service Providers with Commercial Clients: Protects professional services firms, consultants, and service businesses from client payment failures
• Growing Businesses: Helps businesses extend credit confidently to new customers and expand their customer base
• Businesses with Concentrated Customer Base: Critical protection when a few large customers represent significant revenue
• Companies Seeking Financing: Credit insurance can improve access to financing by securing accounts receivable as collateral

Benefits for Your Business

Credit insurance provides numerous strategic and financial benefits:

• Improved Cash Flow Management: Predictable cash flow with protection against bad debts, enabling better financial planning and stability
• Reduced Bad Debt Losses: Minimize financial impact of customer defaults, protecting your profit margins and bottom line
• Enhanced Ability to Offer Credit Terms: Confidence to extend credit to new customers and offer competitive payment terms, helping you win more business
• Access to Credit Management Expertise: Professional credit assessments and recommendations help you make better credit decisions
• Better Financial Planning and Forecasting: More accurate financial projections with reduced uncertainty about receivables
• Improved Access to Financing: Secured receivables can improve your ability to obtain bank loans, factoring, or other financing
• Competitive Advantage: Ability to offer better credit terms than competitors, helping you win more customers
• Risk Management: Professional risk assessment and monitoring of your customer portfolio
• Business Growth: Confidence to expand into new markets and take on new customers with reduced risk
• Balance Sheet Protection: Protects your assets and financial position from bad debt write-offs

How Credit Insurance Works

The credit insurance process involves:

1. Application and Underwriting: Assessment of your business, customer portfolio, and credit practices
2. Policy Issuance: Credit limits approved for your customers based on their creditworthiness
3. Ongoing Monitoring: Continuous monitoring of your customers' financial health
4. Sales Reporting: Regular reporting of sales and outstanding receivables
5. Claims Process: If a customer defaults, you file a claim and receive compensation
6. Recovery: The insurer may attempt to recover from the defaulting customer

Coverage Limits and Terms

Credit insurance typically provides:

• Coverage Percentage: Usually 80-95% of the invoice value, with you retaining a small portion (self-insured retention)
• Credit Limits: Maximum credit limits approved for each customer based on their creditworthiness
• Waiting Period: Time period before a claim can be made (typically 90-180 days past due)
• Policy Limits: Maximum total coverage amount for your entire portfolio
• Territorial Coverage: Domestic, regional, or worldwide coverage depending on your needs

Costs and Premiums

Credit insurance premiums are typically based on:

• Your annual sales volume and credit sales
• Your customers' creditworthiness and payment history
• Industry risk factors
• Geographic spread of your customers
• Coverage percentage and limits
• Your claims history

Premiums are usually a small percentage of your insured sales, making it a cost-effective risk management tool.

Claims Process

When a customer defaults:

1. Early Warning: You may receive alerts about customer financial difficulties
2. Default Notification: Notify the insurer when payment is overdue beyond the waiting period
3. Collection Attempt: Insurer may assist with collection efforts
4. Claim Submission: Submit claim with supporting documentation
5. Claim Assessment: Insurer verifies the claim and coverage
6. Compensation: Receive payment for the covered percentage of the loss

Protect Your Receivables

Don't let unpaid invoices threaten your business. Credit insurance is an essential tool for managing credit risk and protecting your accounts receivable. Contact us today to learn more about credit insurance and how it can protect your business. Our experienced team will assess your credit risk exposure, explain coverage options, and help you find the right policy for your business needs. Call us at +254104490194 or email info@brainstorminsurance.org to schedule a consultation.