Credit insurance: good value or not?

 

This survey was conducted to establish what companies think of credit insurance and what their experience has been, if any, of dealing with the credit insurance industry. The results make interesting reading but the overriding feeling is that the credit insurance industry has shot itself in the foot during the down-turn by arbitrarily pulling cover, increasing premiums and not understanding the needs of its clients. 

 

This document provides an insight into the current views from a wide spread of respondents and is a barometer for current opinion on a powerful financial stakeholder which is sometimes overlooked.

 

At the height of the “credit crunch” where the stability of certain industries or business sectors was deemed fragile, some credit insurance was withdrawn possibly in order to pre-empt potential claims, leaving buyers having to make the decision of whether to continue to trade without the safety net of insurance cover.

 

This begs the question whether credit insurance is worth the money; if when times get tough credit insurers just pull the cover.

 

A massive 87% of respondents felt that credit insurers had not acted fairly during the downturn. Could this be down to credit insurers not understanding the needs of the insured?  

 

There is clearly a demand for the duration of cover to last for the full term of the policy; therefore one option would be to remove the ability of credit insurers to withdraw cover at short notice.  Some respondents indicated that insurers still have some way to go before market confidence can be fully restored following the arbitrary withdrawal of cover during 2009.