Classic commercial credit insurance (WKV)

The term credit insurance, also known as del credere insurance can easily be misunderstood, as credits in the actual sense, such as property credits or bank loans, whereby the party taking the credit insures themselves against not being able to pay off credit are not being insured here. Contrary to such insurance products, which are generally described as residual debt insurance or insurance for non-payment of credit, the non-payment of claims for delivery of goods or services is the subject of the insurance coverage in credit insurance. This is why, in the past few years, the term insurance for non-payment of claims has increasingly established itself. Parties according the credit are insuring themselves in this case.

The term credit insurance originates in the circumstance that there is a time interval between the delivery of goods or in the rendering of a service from one company to another (usually between 30 and 180 days). The supplying company thus grants a credit, so to speak, until the payment has finally been made. These so called suppliers’ credits amount to approx. 300 billion euros per year according to specifications of Euler Hermes Kreditversicherungs-AG.

Any company delivering goods or invoicing a service must insure themselves against the risk of a claim that remains unpaid. If the buying company experiences a strain on liquidity, this can quickly – depending on the amount of the outstanding claim – lead to financial problems right up to insolvency of your own company. Here, credit insurance not only takes over the damages in the case of a loss of claims, but also the checking of creditworthiness of the buying company in Germany and abroad.

The Hermes Kreditversicherungsbank Aktiengesellschaft(now known as Euler Hermes Kreditversicherungs-AG), established in 1917 was the first insurance company in Germany specialised in this area. The objective was to bundle together the insurance branches of commercial credit insurance and fidelity insurance which, until then, were offered individually by large insurance companies. This step was initiated to offer companies competent protection from strain on liquidity.

The Rheinische Garantiebank Kautionsversicherungs-Aktiengesellschaft was founded in 1923. It initially specialised exclusively in fidelity insurance. At the beginning of the sixties, during the course of renaming of the company to Allgemeine Kreditversicherung Aktiengesellschaft(now known as Coface Germany) it also started offering commercial credit insurance.

In 1954 Gerling founded the Gerling Speziale (now known as Atradius), which also specialised in credit insurance. In addition to this, there are also smaller credit insurers who we will consider if required.

Credit insurance serves the purpose of protecting the insured (creditor) from risks and dangers that could ensue to the party according the credit when granting credits/payment objectives to the party taking the credit/debtor. The insured party can also be the debtor (see guarantees).

Areas of application are:

• Commercial credit (e.g. commercial credit insurance for domestic and export claims)
• Credit and commercial insurance for instalment business (e.g. acceptance credit)
• Export credit (e.g. export guarantees and guarantees)
• Personal guarantee insurance
• Personal fidelity insurance

To keep up to date and to actually achieve the desired insurance effect, it is advisable to make use of the services of a specialist broker, who represents your interests and can continuously point out innovations and protective measures.

forward