Your strategic shield against payment risk in Africa

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In today’s challenging economic environment, credit insurance can protect companies from financial risks when customers fail to pay for goods or services.

By providing credit limits for customers, offering expert credit risk analysis, and paying out claims for insured debts, credit insurance is essential for businesses of all sizes — from small enterprises to multinational corporations.

Understanding credit insurance

Unlike consumer insurance products, credit insurance focuses exclusively on business-to-business transactions. It is particularly relevant in Africa, where extended payment terms are common, and businesses often face cash flow pressures.

The product has proven staying power. Credit Guarantee Insurance Corporation of Africa (CGIC) has been operating in South Africa for 70 years, demonstrating the enduring need for effective credit risk management in our market.

Who benefits from credit insurance?

Any African business selling on credit terms should consider credit insurance — from a Lagos-based manufacturing SME supplying local retailers, to a Cape Town exporter shipping wine to international markets, to a Johannesburg distributor managing hundreds of accounts nationwide.

The risk of customer insolvency, protracted default, or political upheaval affecting payment is ever-present. Whether you’re a small enterprise or a JSE-listed multinational, credit insurance helps safeguard your accounts receivable and maintain financial stability.

The real value: Beyond claims payment

Risk mitigation: When a customer fails to pay due to insolvency or protracted default, the insurer typically covers 75% to 95% of the loss. In a market where business rescue proceedings have become increasingly common, this protection is invaluable.
Preventive intelligence: Credit insurance is not just about claims. Marsh can monitor your customers’ creditworthiness, alerting you to information on payment patterns, sector-specific pressures, or other factors affecting the company and industry.
Improved cash flow management: By identifying risky customers early and providing data-driven credit decisions, credit insurance helps businesses improve cash flow and minimize the time spent chasing overdue invoices.
Support for growth: Companies exploring new markets, especially international or unfamiliar sectors, can benefit from Marsh’s local market intelligence and risk assessments.
Portfolio management: Continuous screening of debtors helps companies maintain a healthier customer portfolio, reducing the likelihood of unexpected bad debts.
Improved access to finance: When a credit insurance policy is ceded to a bank or financier as security, businesses can unlock better financing terms. Many African banks generally view insured receivables as higher-quality collateral, which can potentially increase borrowing capacity or reduce the cost of funding.

Marsh as your strategic partner

Our trade credit team offers a comprehensive range of trade finance solutions to help you manage your receivables risk. More than an intermediary, we are your advocate and translator in what can be a complex landscape.

Intermediary: Brokers facilitate the relationship by helping companies find the most suitable insurer and tailor the credit insurance solution to their specific needs. They navigate the market, comparing policies and conditions to ensure the best fit.
Translator: Insurance language can be complex and technical. Brokers translate policy terms, conditions, and insurer requirements into practical, understandable advice for the policyholder. They also communicate the company’s needs and concerns back to the insurer, ensuring mutual understanding.
Advisor: Brokers provide strategic advice on credit risk management, helping companies integrate credit insurance into their overall credit management processes. They assist in interpreting risk assessments, claims handling, and policy compliance.
Market insight provider: Brokers have a broad view of the market, including trends, pricing, and risk appetite.
Mediator: In case of disputes or misunderstandings, brokers can act as mediators to resolve issues and maintain a constructive relationship between the insurer and the insured.

By fulfilling these roles, brokers can help companies obtain the right coverage and fully benefit from their credit insurance policies. This ongoing support is especially important given the dynamic nature of credit insurance, where debtor portfolios and risks continuously evolve.

Debunking common misunderstandings

Despite its advantages, credit insurance sometimes faces skepticism:

“I haven’t had a claim, so the insurance is useless.”
- Like any insurance, its value lies in risk protection, not profit generation. Not having claims means the risk was managed well, partly thanks to the insurance.
“Credit insurance is too expensive.”
- Credit insurance is often affordable relative to the potential losses it prevents. The cost should be weighed against the financial impact of unpaid invoices.
“The insurer won’t pay when I need it.”
- While coverage depends on meeting policy conditions, credit insurance also serves as an early warning system, helping companies avoid risky situations before they escalate.
“It’s just a claim settlement tool.”
- Credit insurance is dynamic and integrated into the credit management process. It’s not a static policy stored away but a continuously updated tool that evolves with the company’s debtor portfolio.

The preventive role of credit insurance

One of the most valuable aspects of credit insurance is its preventive function. Insurers provide ongoing risk assessments and alerts about changes in customer payment behavior or financial health. This allows companies to:

Reassess credit limits and payment terms proactively
Avoid or renegotiate risky contracts
Make informed decisions during the prospect phase, not just after delivery

This continuous monitoring differentiates credit insurance from static credit information reports, which provide only snapshots in time.

Market trends and risk environment

The credit insurance market has remained relatively stable in terms of products but has evolved technologically. Digital tools and data availability have improved risk management and policy administration, making it easier for companies to apply for coverage and monitor risks.

Geopolitical tensions, economic fluctuations, environmental factors like climate change, and sector-specific challenges (e.g., regulatory changes, pandemics) continuously influence risk levels. Credit insurance adapts to these dynamics, providing companies with resilience in uncertain times.

5 steps to mitigate credit risks

Understand your supply chain: Know who your key customers and suppliers are, and where your products fit in the market. Awareness of dependencies helps identify concentration risks.
Engage with brokers and insurers: Maintain open communication to understand policy conditions, coverage limits, and reasons why certain claims might not be covered. Brokers play a vital role as translators and mediators between insurers and companies.
Integrate credit insurance into credit management: Use credit insurance as part of your overall debtor management process, from prospect screening to collection.
Promote internal awareness: Credit managers should elevate their role from operational to strategic, involving finance and sales leadership in discussions about credit risk and insurance.
Regularly review your portfolio: Have your debtor portfolio screened periodically to identify risks and adjust coverage accordingly.

Conclusion

Credit insurance is a powerful, multifaceted tool that goes beyond simple claim settlement. It offers protection, insight, and support that help companies manage credit risk effectively, improve cash flow, and grow confidently. The broker’s role as intermediary, translator, and advisor is essential to unlocking the full value of credit insurance, ensuring clear communication and tailored solutions.