Must you insure all customers?
It is usually stated in the credit insurance policy that all of the components in the turnover linked to a credit risk must be put forward for insurance.
The purpose of this is to avoid anti-selection. Otherwise, only weak customers or slow payers – i.e. the real risk groups in the insurance cover – would be included, which goes against the principle of insurance, which is to spread the risk.
According to this principle, it is also usually required that the risk be spread evenly over a minimum number of customers.
However, we should mention a number of exceptions to the principle of inclusion:
- sales to which there is no credit risk associated, i.e. cash-on-delivery sales
- sales to private individuals
- sales to a company with which stable financial ties already exist
However, the credit insurer will allow certain portions of the turnover to be excluded. It is essential in doing so that this selection takes place based on objective criteria.