Zimnat Trade Credit Insurance stimulates exports

As Zimbabwe endeavours to stimulate economic growth, increasing trade is one of the major priorities of both the government and the private sector. Trading with international markets presents remarkable opportunities to earn foreign currency and grow the economy.

Zimnat General Insurance is assisting the nation in confronting the economic challenges it faces by providing Trade Credit Insurance to facilitate trade.

It is only through meaningful trade that the nation can increase its income and reduce poverty among its citizens. However, trade, particularly with international markets, presents risks. It is the priority of any economy, therefore, to recognise and manage any risk associated with trade.

Zimnat through its Trade Credit Insurance Division is assisting companies across all markets to reduce the risk associated with trade in both local and international markets.

Trade Credit Insurance is an insurance policy that is offered to businesses that wish to protect their accounts receivables from loss due to credit risks and in some instances political risks.

When a business offers deferred payment terms to its local or foreign buyers, there is a risk that the buyer might fail to pay at maturity, something that is common in any struggling economy.

A Trade Credit Insurance policy comes in to compensate businesses in the event that their foreign or local buyer fails to pay them due to insolvency, bankruptcy, protracted default and in some cases actions or inactions on the part of the buyer’s government.

Trade credit insurance is a proven tool used to mitigate risk associated with trade. The product is designed to give exporters confidence to increase export sales and establish a presence in export markets.

As an example, a Zimbabwean plastic bag manufacturer may use trade credit insurance in two ways.
Firstly, if it needs to access raw materials from a foreign supplier (foreign exporter) on credit, Zimnat can come in and offer trade credit insurance to that supplier. If the local buyer defaults on payment, Zimnat will compensate the foreign supplier.

Secondly, the plastic bag manufacturer can offer credit terms to its local or foreign buyers when it sells the finished product. To protect itself from the risk that its buyers might default on payment, it can take out a Zimnat Trade Credit Insurance policy, which entitles it to compensation in the event that the buyer has defaulted.

Trade credit insurance therefore assists buyers by providing them with time to generate income from sales before paying for the products and it assists sellers by giving them the peace of mind of knowing that they will receive compensation if their customer defaults.

In the Zimbabwean scenario, local businesses can use trade credit insurance to access different products and raw materials from foreign suppliers without the need to pay for them upfront or produce letters of credit.

Trade credit insurance can also assist local manufacturers by enabling them to sell their products on credit to foreign markets that they would otherwise perceive as risky knowing that payment is guaranteed and consequently growing their exports.

Trade credit insurance is therefore more than just an insurance policy. It is a financial instrument, particularly for exporters, for managing risks. Trade Credit Insurance kicks in when buyers are unwilling or unable to provide any form of security for their credit sales by way of bank guarantees or letters of credit.

As Zimbabwe’s banking sector battles with decreased liquidity and a low appetite for lending, Zimnat’s Trade Credit Insurance can become a substitute for banks’ letters of credit.
Where foreign suppliers exporting into Zimbabwe wish to facilitate business by offering credit terms to their customers in Zimbabwe, they can use trade credit insurance as security in case a Zimbabwean buyer fails to pay the debt.

Zimnat Trade Credit Insurance, which is situated in Belvedere, Harare, has established relationships with local and foreign reinsurers with which it shares the risk of trade losses, which makes it well equipped to absorb the losses that can occur in any currency.

Where businesses want to enter into new markets, issues to do with buyer reliability always arise. Apart from compensating businesses when they are faced with credit losses, Zimnat’s Trade Credit Division assists in gathering information about local and foreign buyers and markets all over the world.

Zimnat is an associate of the Sanlam Group, one of Africa’s largest financial services groups, which gives it access to information on millions of companies worldwide.
Zimnat Trade Credit Insurance assists businesses in gathering information on foreign buyers and exports markets that they wish to enter.

It provides businesses with professional credit risk expertise, credit management and collection assistance. Thus companies do away with the need to hire third party debt collectors at a cost.
Another benefit businesses can obtain from the Zimnat Trade Credit Insurance is that it unlocks credit value with financial institutions. The Zimnat Trade Credit Insurance policy can give businesses access to receivables financing and improved credit terms from lending institutions.
Trade Credit Insurance is made for uncertain times to ensure the continuity of any business. The establishment by Zimnat of a dedicated Trade Credit Insurance division that focuses solely on assisting Zimbabwean businesses to obtain much-neededprotection when they venture into the export market is designed to enable the private sector to play a crucial role in assisting the government to turn around the economy.

Fore more information please call us now on (242) 741461 or our toll free number 08080063/4/6 or visit our website www.zimnat.co.zw

The Difference between a Surety Bond and an Insurance Policy

So after I started underwriting surety bonds I have had a few questions regarding the difference between an insurance policy and surety bonds. If I didn't deal with bonds myself I would probably  be a little confused by the differences or similarities between an insurance policy and surety bonds too. The two seem similar but have different implications for businesses and consumers.

Lets get to the basics first;

What is a Surety Bond?
A surety bond is an agreement where the surety (either an insurance company or a bank) agrees to pay claims made against a bond. It might sound like your normal insurance but there is a difference. The purchaser of the bond cannot make a claim against the bond unlike an insurance policy where the purchaser makes the claim. Surety bonds are normally required by different organisations as part of licensing application processes, funding processes and contract requirement processes.

We can now take a look at Surety Bonds vs Insurance

Which parties are involved?
The major difference between surety bonds and insurance is the parties involved.

Insurance policies have two parties that is the insurance company and another party.

Surety bonds have three parties, that is the surety company (insurance company or bank), the principal (sometimes refereed to as the contractor who is the business or individual purchasing the bond) and the obligee (who is the beneficiary or organisation requiring the bond)

Who is protected?
Insurance policies protect businesses and individuals from covered losses. This means that businesses and individuals make a personal choice to purchase insurance in order to protect themselves.

Surety Bonds on the other hand protect the obligee against breech of contract. The surety company (insurance company or bank) compensates the obligee if the principal fails to meet agreed terms on a contract.The purchaser of the bond (principal) is not protected.

Who covers the losses?
In insurance policies the insurance company absorbs the whole financial loss except a small portion which is absorbed by the business or individual (called an excess)

With Surety Bonds however, once a claim has been paid fully to the obligee by the surety company, the surety should be reimbursed by the principal who purchased the surety bond.

What are the costs involved?
Insurance costs are calculated against the value of an asset insured. Risks are also a contributing factor in calculating the premium amounts.

Surety bonds premiums are calculated by size of the bond. Also certain types of bonds carry a higher risk more than others which means they attracted a higher premium.

Zimnat originally known for providing all types of insurance has opened a dedicated division which provides both insurance and bank issued bonds and guarantees. Contact them to find the best prices on bonds.

Top Five Benefits of Domestic Trade Credit Insurance

Domestic Trade Credit Insurance is a type of insurance that protects your account receivables. It is taken to protect a company should your local customers fail to pay debts due to insolvency, bankruptcy, or protracted default.

There are many reasons which could cause your customers to fail to pay debts especially in an economy that is facing challenges like ours. Your most trusted customers whom you have dealt with for a long time can still default on the payments due to you. Trade Credit Insurance however will give you the comfort of knowing that in the event that a default happens, someone else bears the consequences.

The good thing is  Domestic Trade Credit Insurance is now available in Zimbabwe through the reputable Zimnat Lion Insurance Company, and here are some of the benefits of getting it,


1. Better Cash-flow Management
Cash inflow is the lifeblood of any organisation. It is always pleasurable for businesses to receive payments from customers within the stipulated time frame. When your business has failed to collect payments your cash flow will be strained. Trade Credit Insurance comes in to replace that cash should a default occur allowing you to grow your business and make new investments. 

2. Sales Expansion

It is easier to sell more when you have your receivables protected. Expanding sales on your existing customers and also selling to other customers who are deemed risky can be  made easier. You can give customers a more liberal time frame to make payments whilst being assured of receiving the payments in the future.

3. Better Financing

Cost of getting funding from different lending institutions is typically reduced  when your receivables are protected by Trade Credit Insurance insurance. In some cases Banks actually require you to have Trade Credit Insurance to approve your loan.

4. Reduction of Bad-Debt Reserves

Trade Credit Insurance reduces bad debt reserving by up to 90%. Reducing your bad debt provisioning will free up capital for your company which can be used for growth of your company. 

5. Free information and economic knowledge

Trade Credit Insurers have large databases on different customers which can be used to reduce your operational and information costs. They assist you in knowing who to sell to on credit and on a cash basis. 

Take advantage of Domestic Trade Credit Insurance and grow your business. Contact specialist Trade Credit Insurers Zimnat Lion Insurance  today. 

Who has the best contractors insurance in Zimbabwe?

A lot of contractors have this question in their mind when they have a contract at hand.

Choosing an insurance company is not always the easiest because there’s no defined rating criteria for who the best contractor’s insurance provider is.  

Any type of contractor whether general, artisan, electrical, paving, plumbing, roofing, landscaping and any other contractor, needs to understand what makes the best contractors insurance company.

There many considerations which you should look at when choosing the best contractors insurance provider, which include:

Coverage

This is probably the most important factor when choosing the best insurance company. You would want to choose an insurance company that protects you on the majority of all your major concerns. Always choose the insurance that covers what you need. If you don't have enough cover, your contract or business could be over before it starts. 

Ease of Making Payments

Paying for your insurance should never be difficult. Find out if the insurance company accepts all modes of payment that is Cash in both United States Dollars, Bond Notes, Swipe, EcoCash etc. 

Claims Paying Ability

An insurance company's claims paying ability is what makes an insurance company. Insurance is a business of paying claims and once that ability falls off, insurance ceases to exist.  The best way to assess claims paying ability is checking the Credit rating of a insurance company and their asset base which can be obtained from IPEC.

Cost

Although it is dangerous to consider only the price of insurance when making an insurance decision, it still remains an important factor when making your choice. Be sure that the price you are paying shows that the insurance company is competitive and reflects ability to pay claims in the case that they arise.

  

Flexibility and Innovation

As an contractor, you should expect to have more choices from your insurer. Its best to have an insurance company where you can pick and choose exactly what you want. A company that offers you traditional products and doesn't innovate will lead you to getting other insurance covers you don't need.

Apart from these things, one of the most important things when buying any service is how you feel when dealing with the insurance company. As a contractor you want to deal with someone that you know is focused on your business and your needs.  

I can not out-rightly say Zimnat is the best insurance company when it comes to contractors insurance but they seem to be ticking every box. 

Apart from them being one of the top 3 insurance companies, they have opened a dedicated division aimed at providing all insurance needs for all kinds of contractors. Their products offering is the probably the largest in the country, which can give you the flexibility you need as a contractor.

You can check out their wide range of products on their website at www.zimnat or call them on +2634741461. 

Bundling Your Insurance: A sure way of savings

  

Why you should Bundle Your Insurance

A bundle generally has a different meaning in Zimbabwe as to the rest of the world. Whenever a bundle is mentioned, we are quick to think about the internet, Whatsapp or Facebook bundles. Based on its true definition a bundle is a number of things that are fastened or held together. However our understanding of what a bundle is, can be misled to think that a bundle is one service offered separately.

This is not the case in the insurance industry. A bundle in insurance or put in other words bundling insurance is buying different classes of insurance (that is your motor, home, business, farming, health and life insurance) from one insurance company. Everyone has things they need to protect from loses and all of these can be insured in one place. I always point out that insurance isn’t the easiest of things to shop for. What makes is difficult is not only the perceived complexity of the product itself but there are just way too many insurance companies you can chose to buy from. Everyone is always conscious about price when buying insurance and it is one thing that makes buying insurance a bit more complex. Nevertheless, once you get the concept of bundling your insurance you simplify the whole process of buying insurance.

Reasons you should bundle your insurance

Convenience

Bundling your insurance means that instead of speaking to various people from different insurance companies you speak to only one person who manages all your insurance policies at once. It is probable that you will receive one invoice and one expiry date, which means its highly likely that you will not forget to pay any of your insurances when they  become due .

Getting Discounts

Having all your insurance policies under one insurance company is a great way of removing the hustle of shopping for insuranc. Since insurance is a numbers game, most insurance companies are willing to reduce their price for you if you increase the number of policies you take with them. Discounts can be negotiated based on the amount and number of policies that you take with the same insurance company.

Saving on Stamp duty.

All invoices that you receive from insurance companies attract a stamp duty which is charged on every invoice. This means that when you don’t bundle your insurance you attract more on stamp duties as you have more invoices from different companies. Each invoice will be charged as separate stamp duty whereas if you bundle the stamp duty is only charged once.

Save on transaction costs

We have a unique situation in Zimbabwe in which transactions of big amounts of money attract more in terms of bank charges. When you bundle your insurance service it means all your insurances are put under one invoice and therefore you make just one bank transaction, saving you a lot in bank charges. Having to pay your insurances to different insurance companies makes you spend more in bank charges, a cost which you can avoid with bundling.

However the only danger in bundling your insurances is doing it with a company which is not financially sound. It’s imperative to research about the company you want to bundle with to avoid putting all your assets in a risky pool.  It is also important to note that insurance products can also be bundled with non- insurance financial products such as micro-finance loans and investments. The best company to bundle your insurance with is a company that has strong balance sheet support and a wide range of insurances products, such as Zimnat which has products in general insurance, bonds and guarantees, medical and life insurance, microfinance and investments.

Article by Taurai Craig Museka, a freelance insurance writer. If you would like to learn more about bundling your insurance contact him on tauraimsk@gmail.com or +263775608014