The Part of Credit Insurance We Don't Talk About Enough
One of the things that has always struck me about the credit insurance market is that we are exceptionally good at talking about two points in a customer’s journey. The first is before a problem exists. The second is after that problem has become impossible to ignore. Between those two points sits a period that receives far less attention than I believe it deserves, despite often having the greatest influence over the eventual outcome.
Perhaps that should not be surprising. Risk is tangible. It can be analysed, measured and debated. Underwriters assess financial information, brokers advise their clients, credit limits are agreed and businesses make informed decisions about who they are prepared to trade with. It is a process built on data, experience and judgement. Entire careers, including my own, have been built around helping businesses understand those risks before they commit to them.
Claims are equally well understood. When a customer becomes insolvent or a debt proves irrecoverable, there is a defined process. Responsibilities are clear. Policy conditions are followed, recoveries are pursued and, where appropriate, claims are settled. It is the moment the policy demonstrates its value and provides the protection businesses have invested in.
Those two stages define how many people think about credit insurance. I believe they are not the stages that determine the outcome. Over the years, I’ve become far more interested in what happens between them. That is where uncertainty creeps in, relationships come under pressure and the eventual outcome starts to take shape.
I have spent much of my career sitting alongside businesses when customers stop paying on time. Sometimes the sums involved have been relatively modest. At other times they have run into hundreds of thousands of pounds. The size of the debt has never really been the interesting part. What has always interested me is how quickly uncertainty changes the way people think.
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When overdue debt becomes uncertainty
That was certainly true of a client I was recently introduced to by a broker. They were owed almost £140,000 by a customer. The debt was insured. The customer was still actively trading. There had been no insolvency event, no claim notification and no dramatic trigger that suddenly changed the position. From the outside, it looked like another overdue account. It wasn’t.
The client was becoming increasingly anxious because cash flow was tightening and every missed payment created another layer of uncertainty. The broker wanted to help, but first needed to understand what was actually happening before advising on the next step. The debtor remained engaged, continued making commitments and maintained that the account would be settled, but progress never seemed to match the assurances being given. Nobody lacked experience. Good intentions were never the issue. Nobody was acting unreasonably. The difficulty was that everyone was making decisions with only part of the picture.
It wasn’t the amount that interested me or even the eventual outcome, although the debt was ultimately recovered. It was how differently the same situation looked depending on where you were standing. The policyholder saw pressure on cash flow. The broker saw a client relationship that needed protecting. The insurer saw an exposure that required monitoring. The debtor wastrying to balance competing commercial pressures while buying time. Every perspective was valid. None of them, on their own, represented the whole story.
This is the part of credit insurance I find most interesting because it reflects something I observed repeatedly throughout my years as a broker.
A commercial problem, not just a collections problem
Businesses do not think about overdue debt in the same way our industry does.
Within our market we naturally separate underwriting, broking, credit control, recoveries and claims into different disciplines. Each has its own expertise, processes and objectives. It makes perfect sense because that is how our industry functions. Clients rarely see it this way.
Whenever I have sat down with finance directors and business owners, the conversation has almost never begun with questions about policy wording or claims procedures. Instead, they ask questions that reflect the uncertainty they were facing.
“Have you seen this before?”
“Do you think they’ll pay?”
“Should we continue supplying?”
“What should we do?”
Those questions confirm most businesses do not want claims. They want their customers to pay. That may sound obvious, but I think it changes the way we should look at the period between normal trading and formal recovery.
When a payment first slips beyond terms, very little is certain. The customer may be experiencing a temporary cash flow issue, waiting for a significant payment of their own, as was the case here. There may be an administrative problem, a pricing dispute or a simple misunderstanding that nobody has uncovered. The business may be showing the first signs of much deeper financial distress. In the early stages, each of those scenarios can look remarkably similar, and that uncertainty influences behaviour in ways that are often underestimated.
Finance teams become more cautious. Sales teams worry about jeopardising relationships they have spent years building. Directors find themselves balancing commercial instinct against financial discipline. Brokers, who often know the client better than anyone else in the process, are expected to provide reassurance while working with exactly the same incomplete information as everyone else. It is an uncomfortable position because there is rarely a single correct answer.
Ask ten experienced credit professionals whether they would continue supplying a customer who has missed two payment promises and you are likely to receive ten slightly different answers. Each answer will be shaped by experience, the nature of the relationship, the value of the account and countless small details that rarely appear on a credit report. That is why I have never believed overdue debt can be viewed purely as a collections problem. It is a commercial problem, with collections forming only one part of the solution.
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Why timing matters more than tactics
The longer I worked in credit insurance, the more convinced I became that timing often matters more than tactics. We spend a great deal of time discussing what action should be taken once a debt becomes overdue. Should supply be suspended? Should additional security be requested? Is it time to involve a third party? Has the point been reached where legal action should be considered?
Those are important questions, but I have often wondered whether we ask them too early. A better starting point is understanding what has changed. Why has a customer who paid consistently for years suddenly stopped? Has the relationship altered, or has the customer’s business changed? Is this a liquidity issue or something more fundamental? Is the customer communicating openly because they genuinely want to resolve the position, or are conversations becoming increasingly difficult because the business itself is beginning to struggle?
The answers to those questions rarely emerge from a ledger. They emerge from conversations. Bringing an independent third party into the process can change the conversation. Assumptions are challenged, different questions are explored and a clearer picture begins to emerge. I have always believed communication sits at the heart of successful debt resolution. Not communication in the sense of repeatedly asking for payment, but communication that seeks to understand the commercial reality on both sides of the relationship.
Businesses know far less about their customer’s circumstances than they think they do. Equally, debtors often underestimate the pressure they are placing on suppliers who are relying on those payments to meet their own obligations. Cash flow has a habit of creating a domino effect. A payment delay in one business is often felt several businesses further down the supply chain.
When those conversations happen early enough, options remain available. Relationships can often be preserved. Payment plans can be agreed. Misunderstandings can be resolved. Additional information can be obtained that enables better decisions to be made. Leave those conversations too long and the position changes, not overnight but gradually. Confidence begins to erode. Assumptions replace facts. Internal pressure grows. The relationship becomes defined by frustration rather than cooperation until positions harden to the point where formal recovery becomes the only realistic option.
It is tempting to think that transition happens because somebody made the wrong decision. In my experience, it is more often because the right decisions were made too late. Throughout more than two decades in credit insurance and collections, the market has evolved enormously. The quality of underwriting has improved. Access to financial information has improved. Data is richer, faster and more accessible than ever before. Claims processes have become more sophisticated, and technology has transformed many aspects of the way we work.
Visibility has become part of the value
One area has not always evolved at the same pace. Visibility.
Historically, brokers and clients accepted that information would arrive periodically. Updates were provided by telephone or email. A recovery agent might report back every few weeks and that was considered perfectly reasonable because expectations were different. There were few practical alternatives.
Today’s clients operate in a very different world. They can monitor a parcel in real time, see exactly where a driver is and know the moment a payment reaches their bank account. Information is expected to be available when it is needed, not simply when somebody has time to provide an update. I do not believe that expectation disappears with debt collection. If anything, the opposite is true. As uncertainty increases, so does the need for visibility.
That is not a criticism of traditional recovery providers. Many achieve excellent results and have built outstanding businesses. It is simply an acknowledgement that client expectations have changed. The modern broker wants to remain close to the process because they remain accountable to their client. The client wants confidence that progress is being made. The insurer benefits from timely information that provides a clearer picture of developing risk.
Those interests are not competing. They are aligned.
Spend enough time in this market and you begin to realise those interests are far more closely aligned than they sometimes appear. Brokers want renewing policies. Insurers want sustainable portfolios. Businesses want customers who pay on time. Debtors want to continue trading successfully. The challenge has never been that our objectives are different. It is navigating the uncertainty before anybody knows how the story will end.
That is why I believe the period between risk and claims deserves far greater attention than it has traditionally received. That isn’t because the market overlooks it. Quite the opposite. Every broker, insurer and credit professional understands the importance of an overdue account. The difficulty is that this is the point where responsibilities begin to overlap.
The broker continues advising their client, but may no longer have complete visibility of the recovery. The policyholder is trying to protect cash flow while preserving a valuable commercial relationship. The insurer monitors developments through the lens of policy exposure and claims experience. If a recovery specialist has been instructed, their focus is on securing payment while preserving as much goodwill as circumstances allow. Everyone is doing exactly what they should be doing. The challenge is that the customer does not experience those separate responsibilities. They experience one relationship.
The middle is where value is created
I think this is where the market has its greatest opportunity to evolve. For years we have measured success by the quality of underwriting decisions and the efficiency of claims processes. Both are important and always will be. They represent the beginning and the end of the journey. The middle has too often been treated simply as the period we pass through on the way to one or the other. I don’t believe that is the right way to think about it. I believe the middle is where value is created.
This is where relationships are strengthened or weakened. It is where businesses decide whether to continue supporting a customer or reduce their exposure. It is where brokers reinforce the trust their clients place in them. It is where information gathered today can prevent a claim six weeks later.
The difficulty is that these moments rarely appear in market statistics because they are almost impossible to measure or predict. There is no data set for the conversation that prevents a dispute from escalating. No performance indicator records the broker who encouraged a client to engage before positions became entrenched. No claims statistic captures the value of uncertainty removed through timely communication.
Those moments happen quietly every day. Over time they shape relationships, influence portfolios and help determine whether businesses continue trading together or part company.
That is why I see the traditional distinction between credit management, collections and claims becoming increasingly blurred. Good credit management is not simply about preventing bad debt. Good collections are not simply about recovering money. Effective claims handling is not simply about settling losses. Each plays its part in giving businesses the confidence to continue trading.
Perhaps that is the biggest lesson I have taken from two decades in the credit insurance market. When I first entered the industry, I assumed the most important decisions would be made when a credit limit was approved or declined. Later, I assumed they would be made when a claim was submitted.
Today, I think differently.
Some of the most important decisions are made long before either of those events takes place. They are made when information is incomplete, when commercial judgement matters more than process and when relationships are under pressure but still capable of being protected. They are made when people are forced to make decisions without knowing how the story will end.
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Success leaves very little evidence behind
Those decisions rarely attract attention because, if they are made well, nothing dramatic happens. The customer pays, the relationship survives and the claim is never needed. The market simply moves on.
Ironically, that may be exactly why this part of the journey receives so little attention. Success leaves very little evidence behind.
We naturally study failures because they are visible. We analyse insolvencies, review claims and examine the decisions that led to a loss. Far less attention is given to the situations that quietly resolved themselves because somebody intervened early enough, asked the right questions or maintained the dialogue when it mattered most. Those are often the moments that shape the eventual outcome.
As an industry, we describe credit insurance as a product that protects businesses against bad debt. I believe it is much more than that. At its best, it gives businesses the confidence to trade, the security to grow and the protection to recover when things go wrong.
If there is one lesson my career has taught me, it is that outcomes are rarely determined at the beginning of the journey or at the end. They are shaped while uncertainty still exists, when relationships are being tested, information is incomplete and decisions still have the power to change what happens next.
It may not be the part of credit insurance we talk about most often.
Perhaps it should be.
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