Role of Insurance in Funding

In addition to its primary function – the protection of creditors from the risk of non-payment by their buyers – credit insurance considerably helps undertakings obtain the funding of such insured receivables.

The policy is used:

• as a security for the financing institution that provides a loan for the funding of receivables.
  • This “added value” of credit insurance is very significant, and in many cases, it allows clients to reach a loan in the first place, since the financing institutions are offered a security that would otherwise have to provided by the client by pledging their assets as a security.
  • Generally all banks and financial institutions of the factoring or forfaiting type accept credit insurance as a guarantee for provided funds.

If you are interested in this service, it is necessary:

• to first discuss the acceptance of securing the assigned/pledged receivables by KUPEG credit insurance with your financing institution
• to agree with your account manager in KUPEG on the preparation of contractual documents
• to proceed in accordance with the contract and the terms and conditions agreed with your financing institution

The following chart describes the situation where an insured company uses credit insurance as a security for provided funding.