Code of Conduct For The Credit Insurance Sector
Code of Conduct For The Credit Insurance Sector
Credit Management
Think Tank
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7. Common commitments 25
The financial crisis has revealed the weaknesses of the credit insurance
product. The business communities and the professional federations ex-
perienced that the credit insurance product needed renewal and a think
tank was therefore created: the “Credit Management Think Tank”.
The think tank acts as a breeding ground for innovative ideas and ini-
tiatives regarding credit management. The think tank must bridge the
needs of the companies, exporters on the one hand and those of the
credit management solutions providers on the other hand. The academic
world plays an advisory and stimulating role in that process.
The think tank needs enterprising and creative people who can examine
each idea from the point of view of their respective disciplines and func-
tions. The members of the think tank therefore come from international
business communities, professional federations and universities. You will
find the list of members on page 77.
Based on the needs of companies, the think tank develops creative and
innovative solutions. One of those needs of the business world was the
development of a Code of conduct for the credit insurance sector. The
Code of conduct was developed by the think tank, discussed with the
federations, presented to the providers of credit insurance products and
finally accepted by them.
The key words in the Code of conduct are: more transparency, better
communication, professionalization of the sector and increased sustain-
ability. We invite you to go through the complete text.
1. Principles of a Code of
conduct
Credit comes from the Latin word “credere” or “to believe in”. Trust
and transparency are the basis for our financial system and for our
product, credit insurance. With mutual trust, the sector will develop its
full potential.
This Code strives to make the sector more efficient and is a win-win for
all involved parties. The Code has been realized in order to formalize
the commitments of all parties and to make these commitments
transparent.
This Code has six different goals: This Code of conduct is in a way an essentially bilateral agreement be-
tween the policyholder and the Credit Insurance Company. However the
Enhancing competition: scope is even larger because brokers are integrated into it as facilitator.
This is an important element for the behavior of the insurance The buyer indirectly takes part into it as well although in most cases he
companies in a market characterized by its oligopoly structure, but does not have a contractual relationship with the Credit Insurer.
where price competition is already tough.
Stimulating transparency: The basic principles of the Code of conduct are:
The Code will encourage all parties, including the buyers, to greater
openness enabling both the insured and the insurance companies to > Openness and accurate information exchange
have more accurate information on their buyers. > A win-win for all parties
Minimizing fraud: > Mutual trust and dialogue
This is the case when policyholders declare a lower amount of covered > Maximum use of IT possibilities
turnover than in reality in order to reduce the premium charge. > Discretion and professionalism
Changing perception:
The Code wants to have a positive impact on the perception of credit
insurance as being an essential part of the credit (risk) management
process.
Reducing “air” in credit limits:
By bringing the credit lines on buyers closer to their actual use.
Increasing sustainability:
The Code wants to optimize communication between credit insured
and insurers whenever there is a need to reduce or withdraw credit
limits. A ‘stop and go’ approach should be avoid.
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• The buyer (who is not a contracting party but crucial for the
credibility issue)
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We can illustrate the four parties as follows: We can illustrate the specific interactions about credit decisions as follows:
General interactions between the four parties Specific interactions (credit) between the four parties
Insurance Payment
policy: Support experience &
premium Credit credit inquiry Credit limit Credit
Commercial Credit needs communication
insurance
relation policy Insurance facilitation
facilitation Company
Full informations
Insurance credit decisions
policy:
credit cover
• It will be supported and discussed for every existing policy and at the
issuance of each new policy.
• Brokers are invited to take into account the adherence to and respect
for the Code in their role as facilitator between both contracting parties.
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The Code of conduct is an initiative from the think-tank launched by CRiON
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3. Moving towards a system that partly allows “information push 6. Taking initiatives to discuss credit lines hardly ever used.
possibility” (e.g. web services application).
7. Analyzing in cooperation with the insured the possibility to reduce or
4. Explaining a clear business strategy with respect for the possible increase specific debtors’ credit lines.
adaptation of credit lines on the basis of a framework with Develop and/or promote solutions in order to avoid the systematic
objective criteria and pre-agreed terms. Decisions on individual and abrupt volatility.
credit limits will not normally be based solely on the situation of the
particular trade sector in which the relevant entity operates. 8. Giving as much notice as is reasonably possible to a customer of
Decisions will be based on various types of information, public and a decision to stop or substantially reduce credit insurance cover with
confidential, financial and non-financial, which constitute a Credit respect to a specific entity. Credit Insurers will make an effort to
Insurer’s unique source of value. provide explanations to companies whenever cover is altered or
stopped.
5. Avoiding competitive price destruction to the disadvantage of quality
(acceptance ratios, speed of decisions,…).
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7. Common commitments
• Federations,
• SME organizations,
• Schools and educational programs
(including academic networks).
Members of the
Credit Management Think Tank
Johan Blauwblomme, Tax, Risk & Credit Control Manager, Balta Industries
Members of the
Credit Management Think Tank