In 2024, a staggering 56% of insurance premiums were paid late in the Lloyd's Market and 63% in the Company Market, [Source needs to be included] jeopardising insurers' financial stability and hindering their investment and growth potential. This alarming figure highlights the urgent need for robust credit management, especially as late payments can negatively impact an insurer's creditworthiness.
But what does effective credit management look like, and what are its benefits?
What is Credit Control?
Credit Control is a strategic approach to assessing, extending, and managing credit risks. It involves a comprehensive set of processes and systems designed to ensure the timely payment of debts, minimise bad debt, and optimise cash flow. At its heart, it's about proactive financial health for your insurance business.
Leveraging data for effective debt management
If, like many insurers, your credit control function is struggling with manual processes, limited resources, and fragmented data, then late premiums are likely to be accumulating.
To address these challenges head-on and significantly improve cash flow, insurers are increasingly turning to expert credit control service providers like Velonetic. By proactively managing credit control, we helped one client reduce their aged debt by 45% and collect £6 million in the third year of the contract.
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Deeper payment investigations: Analysis into unpaid items to identify root causes, such as risk capture errors or broker part payments, ensuring a thorough understanding of financial discrepancies.
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Targeted strategies: Analysis of payment trends, pinpointing repeat offenders, and identifying potential risks to address late payments and aged debt with precision.
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Proactive aged debt management: Gives you valuable trend analysis and performance insights by lines of business to determine true debt compared to perceived debt, offering a clearer and more accurate financial picture.
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Exclusive insights: Gain a significant competitive advantage through benchmarking your performance against unique London Market data, accessible only via a service provider like Velonetic due to their central position.
Final Thoughts: Safeguarding cash flow with a data-first Credit Control Strategy
By outsourcing your credit control and adopting a data-first approach, insurers can safeguard their financial health, optimise cash flow, and seize vital growth potential. It turns a routine time-consuming task into a powerful, strategic advantage.
To learn how Velonetic’s expert Credit Control services can help you proactively manage late premium payments and enhance cash flow