Credit Insurance


Program Options

Competitive payment terms can be crucial to making successful sales, but granting credit can be risky. ERM's insurance protects sellers against the danger of default, and helps increase sales by encouraging more aggressive credit terms.

What is credit insurance?

Credit insurance is protection against the risk that a customer would default on a payment obligation. Insurance indemnifies the seller against the loss.

Coverage applies whether the default is caused by insolvency/bankruptcy, political crisis (for exports), or simple unjustified slow payment.

How can it be used?

Credit insurance is used to:

Increase sales by encouraging the use of more competitive credit terms. Insurance reduces the risk of loss, so sellers can be more aggressive using credit to attract and retain customers.

Obtain financing by adding insured receivables to a borrowing base. Most banks will not permit receivables to be used as loan collateral without insurance to back them up. This is particularly true with export transactions.

Reduce the risks of extending credit. Insurance protects against a variety of perils, including bankruptcy, protracted default (unwillingness to pay), catastrophic situations, and political upheaval.

Save time and money by replacing letters of credit with open account terms. An insured open account sale is much safer than a letter of credit with an unresolved discrepancy, and insurance usually costs far less than a letter of credit..

Finance customers by extending lower interest rates than they can obtain on their own. Even if you lend at prime, and add 1% to cover your costs, the costs of borrowing from you will be cheaper than many companies, particularly in Latin America, can obtain themselves locally.

Enhance a customer relationship by using open account credit terms to signify trust in a customer’s willingness and ability to pay (even if you insure the receivable anyway, just in case your customer turns out to be a problem!). The customer will not know of the insurance in most cases unless there is a default, at which point the underwriter goes after them for the loss.

Gain leverage over problem accounts by using an underwriter’s clout and resources. Many ERM clients appreciate the ability to threaten to blackball a company from ever getting insured credit from anyone else (most insurers share names of deadbeats).

Provide a structure and discipline for credit decision-making. Depending on the program and the policyholder, credit insurance can impose a rigorous discipline. This is particularly important when a company is growing quickly, or when a credit manager is unfamiliar with an industry or region.

Does credit insurance actually work?

Yes! Just ask the furniture manufacturer, whose exports increased ten-fold within 18 months of buying export credit insurance. Ask the wholesaler that could not obtain bank financing, and which now sells over $20,000,000 per year. Or, ask the satellite communications company that used credit insurance to win a lucrative $1,500,000 sale in Latin America. For more examples, click here.

How can I obtain a credit insurance proposal?

ERM is an insurance brokerage specializing in these programs, and our expertise is generally available at no additional cost to the insured company. Our role is to identify the best insurance markets for a client's needs, assist in the application process, and help administer the resulting policy. ERM works with all credit insurance underwriters to obtain the best coverages for the lowest prices available. Call us to discuss your needs with no obligation.

For more information about different program options available, click here. For a brief overview of the various government and commercial underwriters we work with, click here. For cost estimates, click here. A discussion of coverages provided by credit insurance is here.

At any time, call ERM at (860) 435-0430 to discuss your specific needs. There is, of course, no obligation.

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This is a description of certain features of typical insurance policies. Your policy may be different. The actual terms and conditions are contained in the applications, policy text, and endorsements. This is not a solicitation of coverage, which can only be made by a licensed insurance broker or authorized representative. Please read our disclaimer.



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