A Cover for the Reseller

Payment defaults have always been an issue of grave concern for the channel community. And with more and more cases of default coming to light, even the most established players are in a quandary over whether they should offer credit or not; and if they do, to what extent. Help is now at hand: credit insurance is set to become a widely accepted practice in the channel community thanks to the efforts of a proactive insurance sector.

Two insurance companies–New India Assurance and ICICI Lombard General Insurance–have recently come out with credit policies that are targeted at entrepreneurs who want to expand their business as well as de-risk their credits. Under credit insurance, the insurance company protects the insured party against trade risks associated with default and provides coverage for outstanding receivables that are within the approved credit terms.

According to R Sen Gupta, New India Assurance credit insurance risk head and manager, credit insurance policies should not be looked upon only as indemnity. “Our polices are more of risk management tools rather than just routine insurance products. The policy essentially helps entrepreneurs manage their credits more effectively,” he added. In case of ICICI Lombard, the company even offers a facility of intervention, wherein at a charge of around Rs 5,000, the company intervenes for collection of debts in case of default by a buyer.

The channel community has, by and large, welcomed the start of such credit policies. “We have been wanting to expand geographically, but have not been able to do so since we can’t expose ourselves in regions which are less-known to us. So, if we can come across a credit insurance policy, we would be more than glad to go for it,” opined Ketan Patel of Creative Computers.

Many other partners also felt that if the premium rates for credit insurance were good, they would be willing to opt for it. “We are aware of such business practices abroad and if the same is available here, we would seriously consider it,” remarked Pacific Infotech director Kishore

Jeswani.

But not everyone has a positive view on credit insurance. “As businessmen, we should be capable of handling all credit-related issues ourselves instead of delegating it to a third party.” Rashi Peripherals divisional head Rajesh Goenka said.

But skepticism and reservations apart, if policies like these can address the needs of the reselling community in an effective manner, many would be willing to hand over their credit-related hassles to a third party.

TEAM DQ