What Is Consumer Credit Insurance?

Credit insurance refers to an insurance method in which an insurer assumes liability for financial losses incurred when a debtor refuses to perform a contract or fails to pay off a debt. There are mainly export credit insurance and mortgage credit insurance. In order to prevent the insured from slacking off due to credit insurance and excessive credit application, the insured is usually required to bear a certain share of loss as a co-insurer, and certain requirements are imposed on the credit object to prevent the insured from suffering unreasonable losses . If the fault causes damage or loss to the goods, the traveler is not responsible. After the commissioner completes the entrusted affairs, he shall deliver all the proceeds from the entrusted transaction to the client. The principal obligation of the client is to pay the banker all the expenses necessary for the commission and to pay the agreed remuneration. The client should also promptly accept the proceeds obtained by the discipliner in accordance with the trust contract. ^[1]

Credit Insurance

Credit insurance refers to an insurance method in which an insurer assumes liability for financial losses incurred when a debtor refuses to perform a contract or fails to pay off a debt. There are mainly export credit insurance and mortgage credit insurance. In order to prevent the insured from slacking off due to credit insurance and excessive credit application, the insured is usually required to bear a certain share of loss as a co-insurer, and certain requirements are imposed on the credit object to prevent the insured from suffering unreasonable losses . If the fault causes damage or loss to the goods, the traveler is not responsible. After the commissioner completes the entrusted affairs, he shall deliver all the proceeds from the entrusted transaction to the client. The principal obligation of the client is to pay the banker all the expenses necessary for the commission and to pay the agreed remuneration. The client should also promptly accept the proceeds obtained by the discipliner in accordance with the trust contract. ^[1]

Credit insurance refers to

Credit is the deferred payment or currency lending in the purchase and sale of goods. This borrowing behavior is in the form of transfer of goods and currencies subject to repayment. That is, creditors use this form to sell merchandise on credit or to lend currency, and the debtor pays the arrears or repays the loan and pays interest on the prescribed date. Credit insurance is that in this kind of lending activities, the credit seller (seller) of the commodity cannot obtain the corresponding repayment after the commodity is sold on credit, that is, credit purchase

Credit insurance is divided into the following three types:

1. Conducive to ensuring enterprises

1.Credit insurance is

The first feature is that underwriting risks are special. Credit insurance generally covers commercial risks, but government-sponsored credit insurance, such as China Export Credit Insurance Corporation, covers political risks in addition to commercial risks. There are also special export credit insurances that cover war risks.
The second feature emphasizes that loss-sharing credit insurance is different from other insurances in that it emphasizes loss-sharing. Generally speaking, even if the insurance company pays, the insured person still has to bear a part of the loss, and this part of the burden ranges from 5% to 15%.

The third characteristic risk investigation difficulty is different from general insurance products. The subject matter of credit insurance is the credit of a person or an enterprise that does not actually exist. Regardless of the enterprise or the person, its credit level is not a very good investigation. Generally, an insurance company can only judge the size of its credit risk in the future through its past credit history, but in fact this method has a relatively large error.

Historically, credit insurance has been the most popular in Europe. Global credit insurance premiums total US $ 4.2 billion, of which 84% are US $ 3.5 billion in Europe. Over the past ten years, European credit premiums have grown in tandem with the economy, with an average annual increase of 5%. At present, the penetration rate of credit insurance in the US market is low, but the market potential is great. U.S. credit insurance premiums are only $ 500 million, accounting for 12% of the world. In the next five years, driven by accelerated export growth, the expected annual growth of European credit insurance will reach 5 to 7 percent, while the annual growth of the US market is estimated to be about 10 percent.

Credit insurance companies have begun to repackage their existing products and have started to provide information and insurance products separately. Other related services such as debt collection also bring in additional income for insurance companies. As a supporting tool, the Internet also provides cheap distribution channels and high-speed communication methods for various services, such as insurance claims. The boom in online B2B transactions has also created opportunities for credit insurance companies and other information service providers. The outbreak of the Asian financial crisis and the establishment of credit insurance branches have made traders in the region increasingly interested in credit insurance. Currently in Asia, credit insurance is mainly borne by state-owned export insurance companies. Domestic credit insurance business has also begun in various countries. For example, in Japan, all non-life insurance companies cooperate with major European credit insurance companies.

Another way for credit insurance companies to increase revenue is to sell credit information for specific companies. Insurance companies provide customers with the creditworthiness of any company worldwide and sell their credit evaluations. This is an important source of income for credit insurance companies. Credit insurance companies have established databases containing information on millions of companies. In recent years, credit insurance companies have been expanding their databases to provide global credit assessment services not only to traditional insurance customers but also to any interested party.