The super tricky business
Hollard does things differently, and by coupling trade credit insurance with credit risk management, a policyholder is able to insure only the debtors that keep them up at night. A full credit review of each selected debtor is completed, providing a good indication of those the client should be doing business with, helping to prevent bad debt in the first place.
The essence of task three
Not all debtors are created equal and various factors determine each one’s risk. What really matters, from an insurance perspective, is how well each debtor is assessed as a credit risk – which is the task the apprentices were assigned in episode three, task three, sponsored by Hollard.
Presented with three different debtor-creditor relationships (Debtor one: an IT distributor selling on a recurring basis to a wholesaler, Debtor two: a sub-contractor installing kitchen equipment into a complex for a once-off contract and Debtor three: a diesel wholesaler that sells fuel to a supermarket chain) and making use of guest judges Gareth Joubert, Managing Director of Hollard Trade Credit, and Marvin Tshezi, Head of Procurement at Hollard Insure, the apprentices had to strategize and conduct a credit risk assessment in order to arrive at a clearer picture of each one’s credit risk.
Asking the right questions
They then had to answer six questions:
• Will you insure them?
• What is the highest credit limit you would extend to each?
• What is the ideal credit limit for each?
• How would you rank the three debtors in terms of default risk?
• Would you impose any special conditions to providing trade credit cover?
• Bonus question: what do you think the premium would be for each?
Was the quality of their information clear and did they answer all the questions? Which team won? Who were the weakest links and which apprentice/s fell victim to elimination?
Hear the verdict and what judge Simon had to say in episode three.
We would like to thank Hollard for sponsoring the third episode of The Insurance Apprentice 2018.
The winner of The Insurance Apprentice 2018 will fly to London, in business class, for a week to visit Lloyds of London, sponsored Lloyds of London; the winner will also receive a bursary valued at R75 000 from INSETA and win a cash prize of R20 000 from Masifunde Training Centre. The Insurance Institute of South Africa (IISA) is also sponsoring the winner to go to the Insurance Conference at Sun City in July 2018.
Stay tuned for episode four via the FAnews and The Insurance Apprentice websites, YouTube and Facebook.