Credit and Performance Risks

Credit risk is present in all sectors of activity and the risk of contractual default affects us all whether you are dealing with a public or private counterparty. Organisations are increasingly exposed to credit risk in both developing and established markets.

It is often difficult to foresee emerging risks. Increased risk volatility often leads to a rise in failures to deliver or pay for multiple reasons, which translates into heightened credit risk.

Our diverse, global and creative team of specialists  works as your agent and problem solver to overcome concerns or challenges, and work out a strategy to leverage your business volumes.

We believe insurance contributes to the growth of your business as well as providing crucial protection in unstable circumstances.

We find opportunities where others see challenges. Our entrepreneurial culture and exclusive analytical ability helps clients to identify and realise opportunity in volatility.

KEY RISKS

WHAT WE DO

We collaborate with our clients to make sure their businesses are positioned to take advantage of uncertainty and realise opportunity.

The insurance market is now globally recognised for offering products that enable financial institutions  to manage and extend country and counterparty limits, achieve credit enhancement and realise regulatory capital relief.

For all clients, we recommend a consolidation and alignment strategy to analyse and mitigate risk across the supply chain and create a connected approach across applicable insurance programmes.

For credit and performance risks, we recommend the following:

  • Review: of your current credit insurance policies
  • Analyse: portfolio credit risk and define credit risk appetite. Assess pre and post-delivery risks related to your open account receivables and supply chain aligning credit and performance risks with other areas of insurance
  • Develop: unified approach to your risk mitigation strategy and harmonising and optimising insurance across different geographies and insurers whilst ensuring alignment and consistency with your internal procedures.

Our international footprint, agility and co-ordinated approach enable us to service clients, and access insurance markets wherever they may be. This is supported by acting as a market maker and the strength of our relationships with the 60+ global insurers offering cover for credit and performance risk, guaranteeing that we put together the best possible product.

We are creative and rigorous - our credit and performance risks management team works in collaboration with our political, security and analytical specialists to ensure all inherent risks have been considered.

FAQs

We recommend early engagement – even on a conceptual basis - because CPS insurances may often be a core component of securing trade or investment and the risks are transient. The more information the insured is able to share on the underlying transaction, the more meaningful the feedback we can deliver will be. When a deal is in its very early stages, we may provide general and/or theoretical feedback as the risks will continue to evolve and change. This feedback can be used to help enhance deal structures and develop risk management strategy.

We can provide you a proposal form to complete which we can then take to the market.

Alternatively, we may request:

  • details of the counterparty
  • contract terms and conditions
  • information about insured goods/services
  • law and jurisdiction
  • payment terms
  • experience you have had with the counterparty.

For short term trade credit insurance multi-buyer policies we ideally need a list of all customers, credit limit requirements, annual sales and payment terms.

By the insurers? The policy is cancellable by the insurers ONLY for the non-payment of premium by the insured.

By the insured? This policy is cancellable by the insured by written notice to insurers. Any premium in excess of the minimum and deposit that is unearned but already received by insurers shall be returned to the insured. Similarly, any premium in excess of the minimum and deposit that is earned but not yet received by insurers shall be payable by the insured.

You must notify the insurer as soon as possible (within a maximum of 30 days) and provide proof of loss within 90 days. From day 1 to day 90, you must act to minimise the effect of the loss. After day 90, underwriters will deliberate the claim and may request further evidence and information. Typically, by day 165 after the loss has been reported underwriters make a final decision on the validity of the claim.

There are some standard template proof of loss forms which are usually included as an appendix in a policy. If your policy has one of these, then this will need to be filled out and submitted to JLT.

If no proof of loss form is included, then the provision of proof of loss will need to include the following:

  • written confirmation by the insured that there has been a default under the insured transaction (email is sufficient).
  • proof that you have taken measures to retrieve the overdue payment from the obligor such as copies of emails or letters chasing for payment.
  • summary of action taken by the insured to pursue payment from obligor
  • supporting documents – contracts, correspondence concerning activity to mitigate loss.

In addition to the above there may further information relating to the insured transaction that is requested by underwriters in order to process the claim. This will vary depending on the specifics of the policy wording.

Key Stats

Managing $100 BN of insurance capacity at any one time
1st broker to achieve support for real estate finance and derivative business in 2014
1st  broker to secure agreement from Lloyd’s to name banks as policyholders
1st  broker to offer clients a Basel II compliant wording in 2008

WHY JLT

Credit and performance risk

Clients wishing to purchase insurance for credit and performance risks need to ensure that they select a broker with the relevant skills, knowledge and expertise in their business sector.

We believe insurance contributes to the growth of your business as well as providing crucial protection in challenging circumstances.

As a CPS client you will benefit from:

  • access to a diverse global team to deliver creative, comprehensive risk and insurance solutions which facilitate growth, reduce capital costs, improve returns, secure people and assets
Credit and performance risk
  • ideas and products that positively impact risk mitigation and risk transfer strategies allowing you to make business decisions with confidence
  • our ability to create capacity to underwrite new and evolving risks
  • proprietary analytical tools  to ensure you have access to complete and accurate real-time information which enables fact based decision making
  • experienced resources available where you need them without hierarchical, geography or financial barriers
  • consistent engagement through advisory, structuring, placement and claims, drawing in management leverage and technical expertise to ensure that when losses do occur we maximise recovery and minimise the impact on your operations.

Claims capabilities

We deliver results. We deploy all resources to help resolve complex losses and deliver claim payments. Our track record is unblemished.

Our clients have confidence that the insurance policies we arrange for them are expertly structured and written by experienced insurers with strong track records in paying claims.

Our approachable brokers work alongside our meticulous CPS claims professionals who specialise in handling, managing and negotiating claims.

In the unfortunate event of a loss:

  • You would have a single point of contact with overall accountability for all losses wherever they occur
  • Our proactive claims handling process would help maximise your recovery under your programme, while minimising the intrusion and interference to your on-going operations
  • We would leverage our strong relationships with the major leaders, loss adjusters and lawyers to help expedite the claims process
  • You would have access to our sophisticated pre-loss consulting and effective post-loss recovery services.

CPS ANALYTICS

Our starting point when structuring a new policy is to precisely understand your needs. Our brokers sit alongside a team of risk analysts drawn from security, technical and academic backgrounds.

Their substantial knowledge is utilised to help us understand the precise nature of your risk profile, thereby assisting us in determining the right insurance solution for your requirements.

Using ground-breaking modelling and rating tools, such as Sunstone and World Risk Review, our analysts can pinpoint risks, map exposures, analyse the risk triggers, and evaluate probable maximum loss (PML) ratios across a portfolio of assets.

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