We came to unravel some very common myths when talking about credit insurance , because many people in Brazil still have a very superficial view of the product, which is so used abroad in European countries, as it is recognized as the greatest ally of the financial security of a company.
Credit Insurance can reduce the number of employees of a company
Many believe that credit insurance comes to eliminate functions when in fact it helps the work of analysts and managers of a credit team.
A company that has a specialized credit team and sees its sales increasing, this company will demand more employees to manage the growing customer base. But if in the same example, sales are increasing and she has a credit insurance program, she will not need to increase her staff as she will have a specialized team from the insurance company.
And as an ally, she is able to reaffirm the efforts of professionals. A clear example of this is when a credit manager analyzes a bad customer and sends his forecasts to the meeting of the main executives of that company. Alone, his work does not gain so much strength, and his analysis may even be disregarded. With the help of credit insurance, your analysis will be ratified by the insurer, clearly demonstrating the risks that the company will have if it sells to the customer in question.
Credit Insurance is not so relevant for a company with customers without default risk
First, it is difficult to predict a situation of non-default with 100% assertiveness, especially when we remember that the economic crisis situation in the country has affected considerable companies of all sizes.
Second, when it comes to a reasonable customer portfolio, it is very clear that, in a selection, there are customers with low and high default probability rates.
For portfolios with few and large clients, the risk seems to be lower, as they are often companies consolidated in the market and financially stable. However, the biggest risk may be there. It is these customers, in most cases, who represent the largest percentage of the company's profit. If there is a decline or a request for judicial recovery by that customer, the company not insured by credit insurance may also go bankrupt.
To unravel more myths about Credit Insurance, check out how it is inserted in the Brazilian market, with our 2017/2018 trends report:
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