Credit insurance: a tight money tool

lF YOU sell on credit and are having Itrouble sleeping nights because of anxiety about overdue accounts, you may find credit insurance better than a sleeping pill.

Although it might seem that credit insurance--has been inspired by the present shakey economy and inflation, it's not so. There are only two companies in the United States known to write credit insurance, but they have both been in the business since the late 1800s. American Credit Indemnity Co. of New York (ACI) is a subsidiary of Commercial customers, to customers of one type, or customers in a concentrated geographical area are most susceptible to major credit losses. Figures also reveal ,one third of past due with files,

Credit Co., itself a subsidiary of .., Control Data Corp. London Guarantee & Accident Insurance or for obtaining credit insurance by contacting an agent of one of the two companies. If your area doesn't have an agent, you can contact the offices in large cities such as Portland, Or., or the Western regional office, South Pasadena, Ca., for ACI. panies write policies nationally with ,; ACI, the larger of the two, writing 11;i{

Meeting with you, the agent will ask for a list of the customers you wish to cover. This can be blanket coverage or a selected few. Information needed on these accounts includes name, location, an aging of accounts receivable, and the approximate sales and loss figures for a three-year period.

Co. of New York is a subsidiary of the Continental Corp. Both comjudgement, but it can be an ace in the hole when something goes awry with one of your accounts. It also can be valuable to you in strengthening your own credit position. Each policy is tailored to the situation so that all or only selected accounts are covered. Premiums reflect risk exposure and average l/10 to l/4 of lt/o of the insured's annual sales volume.

In addition to protecting your accounts receivable, the insurance can provide positive loss prevention through access to a collection process which can result in payment from lagging accounts. Other advantages of credit insurance according to Peter A. Levine, Western regional v.p. of American Credit Indemnity, headquartered in South Pasadena, Ca., include the strengthening of your position with suppliers because your sales program is insured and the solidity of guaranteed accounts receivable when you want to borrow money.

Statistic show that firms which sell to a concentrated group of large sider it C utbtr 3retr feel noeds Jwsrqt.

ACI also offers a credit sorvie which looks d yq andyzes an asotnrd, d a on extended.

This is set basis with quarterly on ac- counts. A available to servlce ls holders on a contingency basis: a boon to firms doing less than the $l-$2 million volume usually needed to justify insurance.

You can initiate the procedure

Story at a Glance

With this information, a regional ice will draw up a proposal which presented to you explaining how insurance works, the cost, the nts of the deductible, and any endorsements.

If you accept the proposal, an application is completed and you provide a deposit check. Then the entire package goes to the home office for underwriting approval.

As the application is being processed, the company advises you of the lines approved. Where limits are lower than desired, they give you reasons for their decisions. This approach continues for new accounts after the policy is in force.

The procedure for filing a claim can begin the day an account becomes past due, but must be done within a definite time frame, usually within 90 days past due. The insured also must take the responsibility of informing the credit insurer immediately if the account becomes insolvent. A creditors' meeting, a bankruptcy notice, or an embezzlement are among the definitions of an insolvency.

With the economic uncertainty of the '80s, almost everyone extending credit is subject to the growing collection of "horror stories." If you want to remain unfrazzled and able to concentrate on your business, you may find credit insurance a helpful tool.