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Canadian P&C brokers should aim their arrows at the untapped opportunity of receivables insurance

January 14, 2014   by Receivables Insurance Association of Canada

Receivables Insurance Canada

Receivables insurance doesn’t just sit in a drawer until something happens. It’s a real business tool, an essential aspect of corporate risk and growth management.

Cobourg, ON – Jan. 14, 2013 – As an entry level property and casualty (P&C) underwriter in the early 80s, Mark Attley had no knowledge of a lucrative class of insurance or that he was on a trajectory that would place him as the President of the newly created Receivables Insurance Association of Canada.

In 2008, thanks to his discovery of receivables insurance, that trajectory led to the sale of Millennium CreditRisk Management, Attley’s Ontario-based brokerage with $10 million in annual premium turnover, to Princeton Holdings in Cambridge, Ontario, which also owns Toronto-based Guarantee Company of North America.

He was 49 when he sold his company, and remained with the acquiring firm for two-and-a-half years, entering semi-retirement financially secure at 52. “If I had to do it all over again, I’d aim my arrow straight at receivables insurance,” said Attley. “It’s a great product with a great future that many more brokers should take advantage of.”

Receivables insurance offers a set of financial planning tools used by Canadian businesses to protect corporate balance sheets against unforeseen trade disruptions or political turmoil while fostering faster company growth. Attley believes that account receivables is still the biggest unidentified and uninsured exposure facing Canadian businesses today.

Attley has shown hundreds of Canadian business people and bankers the benefits of receivables insurance over other forms of accounts receivables risk mitigation, but the market is still in its early days. Less than 1% of Canadian companies currently utilize receivables insurance as part of their financial planning – or less than 10,000 of Canada’s 1.1 million employer businesses.

Canada’s vastly under-insured state of corporate receivables introduces undue risk on working capital loans, inhibits the amount that a business can be loaned, and also forces higher interest rates on business clients — artificially restricting sales growth.

“If an adverse economic or political event occurs that affects a company’s ability to be paid for goods or services in transit or already provided, a receivables insurance policy pays out,” said Attley. “Receivables insurance gives businesses the confidence required to expand sales with buyers without fear of the unpredictable. It also gives bankers, who are in a position to influence the use of receivables insurance, the confidence to back larger receivables loans at more favourable rates – fostering faster company growth.” 

Attley also identifies another lucrative aspect of receivables insurance. While the long established and hotly contested property and casualty insurance market is driven by price and relationships based on “how much can you get somebody to trust you versus somebody else”, the receivables insurance market is founded on a far deeper business value proposition.

“Receivables insurance is not just another insurance product in which a client sees value only after making a claim because receivables insurance doesn’t just sit in a drawer until something happens,” said Attley. “It’s a real business tool, an essential aspect of corporate risk management and also growth management”.

Reflecting upon his successful career, Attley emphasizes that receivables insurance gives ambitious property and casualty brokers the means to bulletproof accounts. “Because of the evolving knowledge and trust involved in servicing receivables insurance clients, a broker offering it closes off any potential attack from another broker,” he said. 

Your elevator pitch at a cocktail party is that you help companies grow their businesses, while at the same time protecting their balance sheets. To me, that’s a far better  proposition than, ‘I sell the same insurance as everybody else, do you want some?’”

Within his role as president of Receivables Insurance Association of Canada Attley is focused on assisting the membership with the goal of inviting brokers across the country to grow a $200 million market to a minimum of $350 million within five years. In other words, there’s lots of opportunity for P&C brokers.

“Receivables insurance market penetration rates are up to 30% in European countries with long trading traditions, and 15% in the U.S.,” he said. 

For the new generation of property and casualty brokers, an increasingly trade-oriented Canadian business scene offers a ready opportunity to provide Attley’s brand of high-value working relationships with clients and bulletproofing accounts from competitors.

About the Receivables Insurance Association of Canada  

The Receivables Insurance Association of Canada promotes the business opportunity for receivables insurance – also known as trade credit insurance – to Canadian insurance brokers, the banking industry and businesses engaged in domestic trade and exporting.  The association also works to advance industry innovation and product integrity, solve any business problems related to government legislation, and represent the interests of its members by facilitating an open exchange of information and ideas.  Founding members of the Receivables Insurance Association of Canada include “Group of Seven” underwriters, AIG Canada, Atradius Credit Insurance N.V., Coface, Euler Hermes Canada, Export Development Canada, Guarantee Company of North America and Red Rock Insurance Services Ltd. as well as the brokers, Aon Canada Inc., Marsh Canada Ltd. and Millennium CreditRisk Management Ltd.

For more information: http://receivablesinsurancecanada.com/

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