Credit insurance helps banks enable growth and reduce uncertainty

Credit insurance helps banks enable growth and enhance returns by facilitating sales, replacing collateral, securing finance and releasing capital.

In an unpredictable economic environment, it is essential for banks  to carefully manage their credit exposures.

Credit insurance can be a valuable tool for managing risk and facilitating lending and investment activity. By providing lenders with an alternative credit risk distribution channel, credit insurance can help banks increase lending capacity while adhering to internal credit limits.

According to an International Association of Credit Portfolio Managers (IACPM) survey, the top three goals for using credit insurance include:

  1. Increase lending capacity while complying with internal credit limits 
  2. Regulatory capital relief  
  3. Concentration risk mitigation (industry, event)

At the recent American Bankers Association (ABA) Insurance Risk Management Forum, the ABA asked Mark van der Does, Vice President, Marsh’s Lenders Solutions Group, to discuss Marsh’s role in supporting banks use of credit insurance as an alternative distribution, portfolio management, and capital allocation tool.  Listen to this ABA hosted podcast to learn more. 

Key takeaways

Minimize Risk: Reduce your credit exposure

Credit insurance compensates you in the event that a borrower fails to repay their loan obligations when they become due.

Enable Growth: Increase lending capacity

Credit insurance enables you to expand relationships with key clients or in target industry segments. 

Capital management: Consider your distribution strategy

A broad range of bank led financing transactions are available for consideration as part of your distribution strategy.

About our presenter

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Mark van der Does

Vice President, Credit Specialties

Mark van der Does is a placement and advisory leader with Marsh's Credit Specialties practice. In this role, Mark supports clients that use credit insurance as an alternative loan distribution and portfolio management tool. He specializes in advising US banks on-boarding credit insurance for the first time as an approved credit risk hedging tool including structuring of bespoke risk transfer solutions, credit insurance contract negotiations, managing operational risks, and navigating US and state regulatory requirements.

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