IRMI Update—Issue #144
An E-mail Newsletter for Risk and
Insurance Professionals
ISSN: 1530-7948
September 6, 2006
In This Issue
Colleague,
It is a great pleasure to announce a significant addition to
the IRMI resource library, Practical
Risk Management, which we acquired from its previous publisher,
ARM Tech. Practical Risk Management
is a source of practical, concise, action-oriented background and
advice on all of the most important activities, techniques, and
tools of risk management. It is so good the Pittsburgh chapter of
the Risk and Insurance Management Society (RIMS) ranked it as the
"most useful" manual for risk managers in a research paper presented
at the national RIMS annual meeting in the 1990s, and one of my
mentors, Dr. E.J. Leverett, has often said, "If I could have only
one reference manual in my library,
Practical Risk Management would
be the one."
Since 1974, Practical Risk Management
has been one of the world's most widely used risk management references.
I relied on advice it provided when I was a consultant in the 1970s
and have admired it from a publisher's perspective ever since joining
IRMI in the early 1980s. Everyone here is excited to add such a
high-quality publication to the IRMI library of resources.
To assure we maintain the practical, hands-on focus of
Practical Risk Management,
we decided to invite a veteran risk manager to join the IRMI editorial
team. I am delighted to tell you that Millicent Workman, CPCU, is
joining us for that purpose. Millie, who is currently serving as
president of the CPCU Society, has more than 30 years of risk management
experience in a variety of industries. She was honored by
Business Insurance magazine
in 1992 as Risk Manager of the Year, has served in leadership roles
in the Memphis RIMS chapter, and has been placed on several "who's
who" lists in recognition of her many achievements. I see even greater
things on the horizon for an already great publication with Millie
at the helm.
You can learn more about Practical
Risk Management, and review the
table of
contents.
Thank you for subscribing to IRMI Update.
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Use Credit Insurance on International
Receivables—Banks traditionally don't lend against foreign
receivables because they don't have an efficient way to credit-qualify
their borrowers' customers. Exporters using open account terms cope
with the fact that these receivables deplete cash. Approximately
80 percent of exports are now made on open account terms with an
average days-sales-outstanding (DSO) ratio of 75 days. This compares
with an average of about 40 days for domestic sales.
Although transactions done via letter of credit (LOC) are declining
due to the emergence of more efficient information flows and risk
management structures, exporters selling on LOC terms, even if they
offer 90 or 180 days for payment, ordinarily can discount the receivables
and receive immediate cash. Foreign open account receivables are
not as easy to discount. Active exporters often have huge amounts
of working capital tied up in foreign receivables and can't borrow
against them.
Many banks therefore now advise these customers to get credit
insurance on their international receivables. With appropriately
structured credit insurance, banks can include otherwise ineligible
foreign receivables in a customer's borrowing base. And if the exporter
sells its foreign receivables, it can often get an accounting opinion
that allows it to take them off the books, resulting in unencumbered
cash and major improvements in DSO. Credit insurance policies usually
include protection against a wide range of international trade hazards
including buyer insolvency, protracted default, and nonpayment due
to foreign governmental actions.
As credit terms offered to customers have become an important
component of competitive strategy, credit insurance allows policyholders
to gain competitive advantages through extended open terms, aggressive
credit limits, and support while expanding into emerging markets.
Buddy Baker
Vice President, Atradius Trade Credit Insurance
Baltimore
www.atradius.com/us
Suggest a Risk
Tip. Send us a practical tip (less than 300 words) for
identifying and managing risks, buying insurance, managing claims,
or filling gaps in insurance coverages.
Submit your tips.
We'll acknowledge your contribution as we did for Buddy.
We have recently updated a number of the reference manuals in
the IRMI library and published new issues of
The
Risk Report and
Captive Insurance Company Reports. To make sure you don't
miss any of this new information take 30 seconds to scan the "What's
New" summary page.
For IRMI Online and Print
Subscribers.
For
SilverPlume Sage subscribers
There are now over 800 risk management and insurance articles
on IRMI.com. Below you'll find summaries of some recent additions
with links to the articles.
- Mississippi District
Court Concludes Water Exclusion Enforceable—In
his case of the month column, Kevin Merriman looks
at a Hurricane Katrina claim and ruling.
-
Remote
Relations and Legal Duties of Design Professionals—Ken
Slavens describes a recent Iowa case holding that
legal obligations are not extended to the subsequent
purchaser of a building.
-
Which
Claim Should Come First?—Faced with a
tornado loss affecting an imaginary city's hospital,
community center, and famous restaurant, Dr. George
Head wants to know which one you would pay first.
Our annual analysis of the insurance market will be published
in the September issue of
The
Risk Report. Online
subscribers will receive this market report, plus access to
a topical archive of more than 200 previous reports. Each monthly
issue of
The
Risk Report tackles a single risk management issue or
problem in sufficient detail (8-12 pages) to give you useful insights
and solutions that you can put to work. Upcoming issues will deal
with risk management information systems and the risks of Internet
blogs.
Subscribe
today or check out this Web page for more information.
More than 500 construction risk and insurance professionals have
received their Construction Risk and Insurance Specialist (CRIS)
designation. The CRIS continuing education program has also been
approved for CE credit in all 49 eligible states.
Learn more about this specialized curriculum to gain expertise
in construction insurance and risk management.
Jeff Kichaven has written 14 articles on mediation issues since
he began writing for IRMI.com in 2003. As a leading mediator of
insurance coverage and bad faith cases, he was acknowledged as "California
Lawyer Attorney of the Year" by California
Lawyer Magazine in 2006. magazine. Since starting his full-time
mediation practice in 1996, Mr. Kichaven mediates approximately
150 cases per year. His columns address the ways lawyers can best
use mediation to achieve better results and greater client satisfaction.
For more information on Mr. Kichaven, see his full
biography and a
list of his articles.
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