"HOW much did you say I could save by taking out trade credit insurance??"
It seems that the 'costs' of insuring trade credit can become a big fat zero if the savings made on commercial bad debts can be substantially reduced by improving credit risk management in combination with the partnership and resources of a credit insurer.
In the Euler Hermes 2008 publicity material, they include a slide showing an actual -unnamed-customer whose previously (shocking) record of losses from unpaid customer accounts ran at 0.5% of its annual turnover.
Subsequent to teaming up with Euler Hermes in October 2006, the company has shrunk that loss ratio to 0.06%, an 800+ percentage improvement.
On annual sales of circa €800,000,000, the company reduced its losses by €3,750,000.
Let's for a moment guestimate a premium rate of 0.2% on insured sales for the insurance risk premium and add on a bit for servicing charges, and it would appear the net saving to the company would be greater than €2,000,000.
I think the shareholders would be happy with a result like that.
Details from Euler Hermes' presentation:
So, I wonder if any other insurer - or customer - can offer me a better example than this one?
May 08