Non-payment Credit Insurance, an Excellent Partner of Finance Institutions
In a volatile and unpredictable economic environment, financial institutions need to carefully manage their balance sheet and credit risk. Aon can assist in structuring your credit and political risk strategy and building a global insurance program that complies with financial regulations.
According to Aon 2021 global risk management survey, the top five risks for financial institutions are cyber risk/data breach, economic slowdown, damage to reputation/brand, counterparty credit risk, regulatory /legislative changes.
The top five risks in the next two years include: cyber risk/data breach, economic slowdown, damage to reputation/brand, counterparty credit risk, regulatory /legislative changes failure to innovate and meet customer needs. The research also indicated that 76% of the respondents in the survey plan to review credit risk in the near future.
What is Non-payment Insurance?
- Underwriting the financial institutions’ risk of failure to collect loan payments or accounts receivable.
- Coverage of financing risks, including credit financing, non-recourse project financing, public infrastructures and securities, etc.
The features of credit insurance:
- Protects financial institutions from the risk of failing to collect the receivables from borrowers.
- Customised credit insurance, policy terms can be designed according to bank needs and individual financing agreements.
- Insurance period with financing agreement, up to 20 years.
- Strengthen capital management and risk management.
Aon can help financial institutions:
- Deepen customer relationship - increase the bank's credit line to customers and strengthen the relationship with customers.
- Enhancing competitiveness - sharing the risk of large financing projects through insurance, without requiring other competitors to join in the loan.
- Capital Relief - Insurance is a legitimate risk mitigation tool. Insurers with good credit ratings can reduce bank’s risk-weighted assets and improve capital adequacy ratio.
We focus on:
- Monetary policy is tightened and tensely leveraged, companies with weak financially may increase default risk due to costs raising.
- Global insolvency rate expected to increase by 15% - 30% in 2022 as government support for business tapers off.
- Geopolitical risks is raising, coupled with supply chain disruption and production capacity reallocation, not only affect corporate investment strategies, but also greatly increase the uncertainty of credit risk.
- Rising energy and commodity prices further magnified inflationary pressures.
- The debt of emerging market is climbing, default risk deserves attention.