For the ball bearing manufacturer, the roller skate producer is an account receivable that may never be received. Credit insurance compensates the ball bearing manufacturer for the lost money, or at least a portion of it depending upon the terms of the policy. Credit insurance is always written on a co-insurance basis either as a specific percentage of the outstanding receivables or as deductibles. The form of coinsurance is negotiable and should fit the client's needs. Credit insurance, especially in international transactions, is often used as a substitute for a letter of credit.
Letters of credit can be time-consuming and expensive for the buyer to obtain.
Credit insurance, on the other hand, is purchased by the seller to make certain that the debt will be paid. The premium for credit insurance is based primarily upon a firm's insured sales. It serves customers in more than 30 countries and provides classical as well as political coverage against default of private and public debtors located in approximately 120 countries. This makes Gerling one of the most international credit insurance groups worldwide. Our agency does the underwriting and other servicing, but we use Gerling America paper.