Credit insurance pays dividends
One of the largest payouts under the BCSA’s Insolvency Protection Scheme has been awarded to a member following the insolvency of contractor RC Group Limited in Summer 2005.
The insurance payment for the six figure bad debt was made within four weeks of the claim submission to insurers, leaving the BCSA member Finance Director: ‘Absolutely delighted. Over the moon.’ Liability had also been admitted for all the retention payments that were payable, but not due, under contracts with RC Group.
The failure of RC Group came suddenly, surprising BCSA members and insurers alike. Cover was being provided on RC Group by credit insurance companies for amounts way in excess of the resultant bad debt mentioned above. RC Group’s payment performance was prompt and the available financial accounting information on RC Group prior to the insolvency was satisfactory. BCSA Legal Director Marion Rich said:’This is, unfortunately, only one example of a bolt out of the blue as, according to insurer’s statistics, over 50% of corporate failures are from businesses that had hitherto been good payers.
The failure of RC Group is an excellent example of how a failure can occur despite all the sophistication that surrounds credit management these days. The speed of the claims settlement is testament to the wisdom of the BCSA member to insure under the Scheme.’
Members of the BCSA have exclusive access to this credit insurance Scheme, organised by broker IRC.