The Credit Insurance Agreement
The credit insurance agreement is a general agreement which insures all the company's credit sales. Once the agreement is signed, the premium rate is fixed and will be the same for all buyers and markets. The premium is calculated on the basis of the policyholder's total credit sales in a given period, multiplied with the premium rate set in the agreement. The premium rate is set on the basis of insured annual volume, type of industry, markets and characteristics of the policyholder's buyers and loss history.
Keep in mind that the costs can be included in your calculation so that it will not reduce your profit margin. You must also take into consideration that the policy may reduce your financial costs, since the policy will put you in a position to negotiate better terms with your bank.
Credit limits will be establish for each buyer under the policy. Such limit sets an upper limit to the size of the exposure the policyholder may have on anyone buyer.
GIEK Kredittforsikring undertakes a risk assessment of all buyers to check that buyer is creditworthy.
The policyholders duties
The policyholder must report his sales on a monthly or quarterly basis. Premium to be paid is based on the value of the company's credit sales during the period.
If an outstanding invoice is not paid within 30 days after due date, the policyholder must stop all new deliveries. All defaulted invoices must be reported at least 60 days after due date.
Claims must be sent to us together with documentation for the claim. In order to secure the best possible collection of outstanding amounts, we work closely with the policyholder both before and after the claim payment.
The claim will be paid within 30 days after GIEK Kredittforsikring has received the documentation necessary. If the loss is a result of unwillingness to pay (Protracted Default), the claim is paid after 6 months.