Heritage Insurance has rolled out a new groundbreaking product, the Trade Credit Insurance that aims at cushioning suppliers, manufacturers and exporters from payment default risks stemming from buyer insolvency or reneging on payment for various reasons.
Speaking during a colourful launch ceremony held at the company's head office in Nairobi, Heritage Insurance Managing Director Godfrey Kioi noted that the product was timely in safeguarding investments made by small or high net suppliers.
The product could not have been introduced to the market at a better time given the strain the Kenyan economy has recorded from the beginning of 3rd quarter. By offering beneficial payment conditions, the seller provides working capital to its buyers, allowing them to start processing or selling the goods before payment is due.
Currently in Kenya, the respective credit risk of buyer non-payment is typically assumed by the seller, if not covered by a letter of credit, or collateral security mitigated by means of advance payment.
Among the available cover options available under Trade Credit Insurance include Whole Turnover Insurance that covers entire debtor book, Top Tier cover that shelters the top buyers of the company and Single Debtor cover that targets a single debtor.
Speaking at the same ceremony, Heritage Insurance Director for Underwriting and Claims Beatrice Hiuhu observed that companies have an array of benefits to reap by taking up the cover.
Some of the anticipated benefits include safer business growth, increased borrowing, protection of the balance sheet and provision of valuable market intelligence on the financial viability of customers.
Some of the factors considered in determining premium payable under the product include insurable turnover, quality of the risk, credit terms offered by the proposer, quality of the credit management, sector of the buyers, countries covered, spread of the risk and level of self-retention.
In rolling out this product, Heritage Insurance has partnered Swiss Re, a leading and long standing player for credit-related lines of business and Underwriting Africa specialist underwriter on trade credit insurance.
Click here for more details about the product.