Credit insurance code of conduct launched
A credit insurance industry lobby group has released a market code of conduct to address the breach of trust it says arose between insurers and clients after the financial crisis.
The Aon-backed Credit Management Think Tank 2015 drew up the code after insurers withdrew coverage and complained of insufficient information from clients.
The voluntary code of conduct aims to create more transparency in the market, minimise fraud and reduce the "air" that means credit lines are higher than buyers' real needs.
The group estimated that the average use of committed credit lines in the sector is about 30 percent or below.
It hopes to increase "sustainability" in the market by avoiding a "stop-and-go" approach to insurance.
"Although the code wants to let the competition between the insurance companies take its course, it lays particular stress on the service that the client expects instead of having a raging price war resulting each time in a lower service level," it said.
The code will be piloted in Belgium before being negotiated on a European level.
Each year a report will be published outlining how the code is being met.
While brokers will not sign the code, they will be encouraged to promote its inclusion on contracts.
Insured parties will commit to supporting credit inquiries requested by insurers, the code explains.
Credit insurers will work towards providing insured parties with better systems to inform them on changes to their debtors' credit ratings and to making their pricing systems more transparent.
The Credit Management Think Tank of industry leaders and academics was brought together last September by Aon subsidiary and Belgium-based credit insurance broking specialist CriON.
The credit insurance market covers businesses against the risk of their debtors defaulting.